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
Saven Travel Corporation is considering several investment opportunities in order to diversify its operations. Mr. Saven, president, is trying to determine the firm''s cost of capi

The formula explained in the above paragraph enables the investor to compute the value of a bond with an embedded option as the difference between the value of an

Question 1: i) Activity Based Costing is better than the Traditional Product Costing. Discuss, by making use of empirical evidence ii) The replacement of cash-based accounti

Federal Open Market Committee The principle document making body of the Federal Reserve, the FOMC consists of 7 governors of the Federal Reserve System and 12 Federal Reserve D

Several overseas factors are subsidiaries of UK banks or their agents who offer facilities to companies with export credit sales usually of above £0.25m. Overseas factors carry out

What are the time dimensions of the income statement, the balance sheet, and the statement of cash flows?  Hint: Are they videos or still pictures?  Explain. The income stateme

Illustrate the capital markets in maturity of the securities? On the basis of the maturity of the securities traded, capital markets can be introduced here: Capital markets

Asset management Ratios (Turnover Ratios)   Receivables Turnover Ratio  It is a measure of receivables turnover.   Payables Turnover Ratio  It is a

credit limit decision bajaj electronics company

Performance of Mutual Funds The performance of Mutual Funds can be evaluated by calculating the rate of return earned during the relevant comparison period. The return will inc