Top primary dealers to get higher commission
FE Report | Tuesday, 22 July 2008
The government has decided to offer higher underwriting commission for treasury bills and bonds for top three primary dealers (PDs) aiming to bring dynamism in the secondary securities market, officials said.
The decision has been taken at a meeting of the committee on cash and debt management to boost the country's secondary market through creating competition among the PDs.
Currently, a high-powered committee on cash and debt management, headed by the finance secretary, is now working on the separation of the cash management from that of the public debt management.
"We will finalise the higher rates for such commission consultation with the ministry of finance," a senior official of the Bangladesh Bank (BB) told the FE Monday.
He also said that the rates would be higher than the existing ones. The present rates are 0.025 per cent (2.50 paisa) and 0.075 per cent (7.50 paisa) for treasury bills and bonds respectively.
A total of Tk 156 million was paid as underwriters' commissions to PD banks and financial institutions for fiscal year 2007-08.
The BB will select top three PDs considering their performance on participations in the primary auction and secondary transactions of the government-approved securities on quarterly basis, the official added.
Earlier, the central bank selected nine PDs - eight banks and a non-banking financial institution (NBFI) - to handle government-approved securities and issued a guideline for them.
The PDs will subscribe and underwrite primary issues and make secondary trading deals with two-way price quotations.
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.
The decision has been taken at a meeting of the committee on cash and debt management to boost the country's secondary market through creating competition among the PDs.
Currently, a high-powered committee on cash and debt management, headed by the finance secretary, is now working on the separation of the cash management from that of the public debt management.
"We will finalise the higher rates for such commission consultation with the ministry of finance," a senior official of the Bangladesh Bank (BB) told the FE Monday.
He also said that the rates would be higher than the existing ones. The present rates are 0.025 per cent (2.50 paisa) and 0.075 per cent (7.50 paisa) for treasury bills and bonds respectively.
A total of Tk 156 million was paid as underwriters' commissions to PD banks and financial institutions for fiscal year 2007-08.
The BB will select top three PDs considering their performance on participations in the primary auction and secondary transactions of the government-approved securities on quarterly basis, the official added.
Earlier, the central bank selected nine PDs - eight banks and a non-banking financial institution (NBFI) - to handle government-approved securities and issued a guideline for them.
The PDs will subscribe and underwrite primary issues and make secondary trading deals with two-way price quotations.
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.