The major participants in secondary market are banks, brokerage firms and bond houses. They buy and sell T-bills on behalf of customers and themselves. The customers include depository institutions, insurance companies, pension funds, non-financial firms, and state and local governments.
Government dealers help to maintain an orderly market mechanism through trades of T-bills for their own accounts. They are the market makers for these instruments by providing Bid-Ask quotes. The US Treasury Bill market attracts both domestic and international investors because of the perceived strength of the US$ apart from the liquidity, maturity profile and the risk-free nature which are true for most of the sovereign securities.
The Fed (Federal Reserve Bank) usually holds more than $100 billion worth of T-Bills at any given point of time and buys large quantities of bills from the dealers in the secondary market when it wants to inject more money in the economy.
In UK, Gilts are traded in a very active market centered on a group of firms known as ‘Gilt-Edged Market Makers' (GEMM). The GEMMs deal continuously with major professional investors life pension funds and insurance companies, across the entire list of gilts. GEMMs, along with institutional investors and custodians who may hold stock on behalf of private investors, hold gilts in computerized form using the CREST settlement system (The CREST system is a computerized system to settle the registration and transfer of dematerialized securities including UK and Irish corporate securities, UK government securities and international securities). Some of the GEMMs make special provision for deals in small amounts.