ANALYSIS OF THE PRIMARY DEALERS FUNCTION

Vesna Martin

Ekonomske ideje i praksa, 2023, issue 48, 53-65

Abstract: The purpose of this paper is to examine the role of primary dealers, whose introduction promotes the development and trading of securities on the primary market while also making government securities easier to place. As a result, primary dealers act as a bridge between the government and large institutional investors. Their active role increases secondary market liquidity, which can potentially lead to an increase in investor base, simplification of the trading process, and reduction of transaction costs. As a result, borrowing costs for securities issuers are reduced, which contributes to the continued development of financial markets. In this paper we will examine the selection criteria and obligations of primary dealers, as well as their role in capital market development and monetary policy implementation. The final section of the paper focuses on the evolution of this function in Serbia. So far, regulatory changes in Serbia have enabled the function of primary dealers to be implemented, but they have not yet been implemented. Their implementation in Serbia would increase primary market liquidity, reduce the risk of debt financing, and contribute to the secondary market's further development.

Keywords: primary dealer; financial markets; security trading; underwriting; debt management (search for similar items in EconPapers)
JEL-codes: D53 H63 O16 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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