The Bank of Ghana is inviting applications from persons expressing interest in becoming authorized Primary Dealers and Bond Market Specialists.
This is because the BoG and the Ministry of Finance is undertaking a review of the Primary Dealer System. The revision focuses on the way banks have authorization to participate in the Wholesale Auction of Government Securities.
Additionally, the Bank of Ghana reveals that the invitation is open to interested banks and non-bank institutions.
A primary dealer is a bank or other financial institution with approval to trade securities with a national government. Also, such dealers sell the Treasury securities that they buy from the central bank to their client. Thus, creating the initial market. A firm must meet specific capital requirements before it can become a primary dealer.
Primary dealers are to bid for government contracts competitively. They purchase the majority of Treasury bills, bonds, and notes at auction. They are to submit meaningful bids at new Treasury securities auctions. In a way, primary dealers are market makers for Treasuries.
Requirements for Application
Highlighting the requirements for applying, the Bank of Ghana posited that banks and non-bank Institutions should provide the following information:
• Commitment to Bid in all auctions of Government of Ghana Securities.
• Commitment to underwrite not less than the Banks/Institutional proportional share. This will be determined from time to time by primary issuance of Government of Ghana Securities and Bank of Ghana Bills at every auction.
• Preparedness to actively trade in Government Securities on the Secondary Market in accordance with the Guidelines established by the Ghana Fixed Income Market (GFIM) Committee.
• Readiness to acquire and maintain adequate infrastructure in terms of both physical infrastructure and skilled manpower. This is to ensure efficient participation in primary issuance, trading in the secondary market, providing portfolio advice and education for investors.
• Compliance with applicable requirements under the existing Guidelines. This may be amended or modified from time to time to abide by the code of conduct provided by BoG for Primary Dealers.
Also, all interested persons are to submit in prescribed form to the Bank of Ghana, any information as may be specified time to time.
Recommended Documents to Guide Primary Dealers
Furthermore, the Bank of Ghana mentions that applicants can refer to the following documents available on their outfit’s website for guidance:
• Government Securities Market for Primary Dealers and Bond Market Specialists directive.
• Requirements and Responsibilities of Primary Dealers and Bond Market Specialists.
Finally, the Bank of Ghana reveals that “the dealership of all existing Primary Dealers who have complied with the guidelines will be automatically renewed.
Bank of Ghana says it will terminate applications of dealers who fail to meet their dealership obligation.
“Applications should be submitted on or before Wednesday, 10th March 2021”.
BoG
