Role of primary dealers, Financial Management

Role of Primary Dealers

To promote the investment activity in the Government Securities market, several countries have adopted licensed Primary Dealers (PDs) as important intermediaries in the market. The typical responsibilities of PDs are:

  • Meeting the minimum bidding requirements,
  • Giving two-way quotes, and
  • Providing information of the market activity to the central bank etc.

In some instances PDs have special rights to different activities in the money market like primary auctions, or some special facilities in market operations, open market operations, underwriting commission etc. PDs have an important role to play in the development of the secondary market for government securities. The prices of PDs account for all the available information, they trade in the market, and also provide the central bank with the latest market information, and design new instruments, etc. The vital role of PDs in the market requires some regulatory control and the central banks periodically review the performance of PDs and make their operations performance-based. Rating of PDs as established in Poland is a laudable feature.

The RBI designed the system of Satellite Dealers (SDs) from 1996 as a second player in the Government Securities market after the PDs. The specific objective of SDs is to promote retail investments. However, the system could not prove as useful as expected and was eliminated.

 

Posted Date: 9/10/2012 7:45:23 AM | Location : United States







Related Discussions:- Role of primary dealers, Assignment Help, Ask Question on Role of primary dealers, Get Answer, Expert's Help, Role of primary dealers Discussions

Write discussion on Role of primary dealers
Your posts are moderated
Related Questions
Determine about the Sales agents Normally used for more effective sales and marketing activities for a product for example AVON (cosmetics) door to door agents in the UK. -

Question 1 Describe the functions of merchant banking and functions of financial intermediaries Question 2 What do you understand by book building and Green shoe option

The management of Nelson plc wish to estimate their firm’s equity beta. Nelson has had a stock market quotation for only two months and the financial management feels that it would

The NPV decision rule needs that a company invest in all projects that have a positive net present value. This presumes that sufficient funds are available for all incremental proj

The mortgage-backed securities dealt with till now are agency mortgage backed securities. There are other MBS which can be for any kind of real estate property.

Deseasonalizing a Time Series The Ratio to Average Method allows us to identify the component of the seasonal variation in time series data and the indices themselves help us

Case Study based on Financial Statement Analysis of Hatsun Agro Private Limited 800x600 Normal 0 false false false EN-IN X-NONE X-NONE

Alger Corp wants to buy some construction equipment for $50,000, which has a useful life of 4 years with no salvage value. Alger uses straight-line depreciation. Alger has a tax ra

Problem: (a) Critically analyse interest rate swap and currency swap. (b) Explain why a bank may face credit risk when it enters into offsetting swap contracts. (c) Two

Definition of cost of capital In analyzing the cost of capital it is presumed that business risk of the firm remains unchanged (i.e., that projects accepted don't affect the va