BB to appoint 2 more banks as PDs
Sunday, 6 December 2009
Siddique Islam
The central bank is going to appoint two more commercial banks -AB Bank Limited and National Bank Limited - as primary dealers (PD) aiming to brining dynamism in the secondary securities market.
"We've started the processes to appoint the banks for increasing the number of PDs that would act as market makers," a senior official of the Bangladesh Bank (BB) told the FE Saturday.
He also said the banks may obtain their licences by the end of this month after completing the assessment processes properly.
The central bank took the latest move after issuing licences to four new PD banks and financial institutions in the last week of November.
The four new PDs are Mercantile Bank Limited, Mutual Trust Bank Limited and non-banking institutions LankaBangla Finance Limited and IPDC which started their functions from December 1 this year.
Currently, the number of PDs stands at 13. Of them, 10 are commercial banks and three non-banking financial institutions (NBFIs).
In South Asia, Bangladesh holds the second position in terms of number of PDs. India tops the list with 17 PD banks and financial institutions while Sri Lanka has 11 and Pakistan 10.
The central bank of Bangladesh has already amended the guidelines for PDs allowing commission and liquidity support to activate the secondary securities market.
"The PDs will be paid underwriting commission at a rate to be determined by the government from time to time," the central bank said in its amended guidelines, issued earlier.
The PDs will subscribe and underwrite primary issues and make secondary trading deals with two-way price quotations, according to the guidelines.
A PD will not short-sell any particular issue and will not hold a short position in secondary dealings. The PDs will not act as inter-bank or inter-dealer brokers as specified in the guideline.
Currently, three treasury bills (T-bills) are being transacted through auctions to adjust the government borrowing from the banking system.
The central bank is going to appoint two more commercial banks -AB Bank Limited and National Bank Limited - as primary dealers (PD) aiming to brining dynamism in the secondary securities market.
"We've started the processes to appoint the banks for increasing the number of PDs that would act as market makers," a senior official of the Bangladesh Bank (BB) told the FE Saturday.
He also said the banks may obtain their licences by the end of this month after completing the assessment processes properly.
The central bank took the latest move after issuing licences to four new PD banks and financial institutions in the last week of November.
The four new PDs are Mercantile Bank Limited, Mutual Trust Bank Limited and non-banking institutions LankaBangla Finance Limited and IPDC which started their functions from December 1 this year.
Currently, the number of PDs stands at 13. Of them, 10 are commercial banks and three non-banking financial institutions (NBFIs).
In South Asia, Bangladesh holds the second position in terms of number of PDs. India tops the list with 17 PD banks and financial institutions while Sri Lanka has 11 and Pakistan 10.
The central bank of Bangladesh has already amended the guidelines for PDs allowing commission and liquidity support to activate the secondary securities market.
"The PDs will be paid underwriting commission at a rate to be determined by the government from time to time," the central bank said in its amended guidelines, issued earlier.
The PDs will subscribe and underwrite primary issues and make secondary trading deals with two-way price quotations, according to the guidelines.
A PD will not short-sell any particular issue and will not hold a short position in secondary dealings. The PDs will not act as inter-bank or inter-dealer brokers as specified in the guideline.
Currently, three treasury bills (T-bills) are being transacted through auctions to adjust the government borrowing from the banking system.