## Primary Dealers in Government Securities

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**Canonical URL:** [Primary Dealers in Government Securities](https://www.imf.org/-/media/websites/imf/imported-publications/external/pubs/nft/2005/pdgs/_pdgs.pdf)

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### Overview
- Title: Primary Dealers in Government Securities
- Authors: Marco Arnone and Piero Ugolini
- Publication: International Monetary Fund, Washington, DC
- ISBN: 1-58906-379-1
- Price: $25.00
- Context: Growing number of countries have established or are establishing primary dealer (PD) systems over the last 10 years.

### Objectives of the Paper
- Provide guidance on designing a primary dealer system appropriate to market development needs.
- Discuss theoretical and operational issues related to establishing a PD system within public debt management.
- Assess under what conditions a PD system can positively contribute to the functioning and development of government securities markets.
- Examine how a PD system can support both primary and secondary markets by:
  - Providing a consistent, dependable source of demand in the primary market.
  - Fostering secondary market development through two-way quotes for selected issues and servicing the retail market.
- Emphasize the joint strategy role of the debt manager and the group of primary dealers in supporting effective market functioning and development.

### Survey and Empirical Basis
- A survey on primary dealer practices and views was conducted in 2001.
- Survey distribution: sent to 47 countries.
- Responses received: 39 countries.
- Sample composition: countries varied widely in size and stage of economic development.
- Empirical use: survey responses are used to draw on practical country experiences for guidance and to inform the analysis.

### Key Findings and Perspectives
- Industrial countries generally already have PD systems; many established theirs only in the last few years.
- A number of emerging market and developing countries have adopted, or are in the process of adopting, PD systems, while many others have not.
- Among the countries surveyed, there was broad agreement among authorities that a primary dealer system is to be highly recommended.
- Under an effectively designed PD system:
  - The primary market benefits from a more consistent, dependable source of demand.
  - The secondary market benefits from market-making activity (two-way quotes) and retail market servicing.
  - The debt manager and primary dealers pursue a common strategy to support market functioning and development.

### Intended Audience and Use
- Policymakers and authorities considering establishing a primary dealer system.
- Debt managers seeking operational and technical guidance on PD system design.
- Analysts interested in how PD systems fit into broader financial market development strategies.

*Source: Primary Dealers in Government Securities — Marco Arnone and Piero Ugolini (International Monetary Fund).*

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_Source: https://www.imf.org/-/media/websites/imf/imported-publications/external/pubs/nft/2005/pdgs/_pdgs.pdf_