Primary Dealers in Government Securities: Policy Issues and Selected Countries Experience
IMF Working Papers, March 1, 2003
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- Primary Dealers in Government Securities: Policy Issues and Selected Countries Experience
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Bibliographic details
- Authors: George Iden, Marco Arnone
- Published: March 1, 2003
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451846492.001
Summary and Purpose
- Discusses policy issues related to the establishment of a primary dealer system for countries considering this step.
- Emphasizes the importance of assessing whether a primary dealer system fits into the overall strategy for financial market development in the country.
- Under a primary dealer system, the debt manager and the group of primary dealers pursue a common strategy in support of the effective functioning and development of primary and secondary markets for government securities.
- Presents results of a survey of country practices conducted in early 2001.
- Among the countries surveyed, there was broad agreement among authorities that a primary dealer system is to be highly recommended.
Key Findings and Observations
- Primary dealers are designated financial firms that act as principal intermediaries in government securities markets.
- A primary dealer system aligns debt management objectives with market development and secondary market functioning.
- Survey evidence (early 2001) indicates broad endorsement of primary dealer systems by authorities in surveyed countries.
Policy Issues and Considerations
- Fit with national financial market development strategy is a key consideration before establishing a primary dealer system.
- The system should support both primary and secondary market development and effective market functioning.
- Roles typically involve coordination between the debt manager and primary dealers to pursue a common strategy.
Subject Coverage and Keywords
- Subjects: Asset and liability management, Central banks, Financial institutions, Financial markets, Government securities, Liquidity, Open market operations, Securities, Securities markets.
- Keywords include: Australia and New Zealand, dealer, dealer status, dealer system, dealers activity, Global, Government securities, issuer policy, Liquidity, market, market liquidity, market structure, market-making responsibility, Open market operations, PD market participant, price discovery, Primary dealers, public debt management, secondary market, Securities, Securities markets, securities transaction, WP.