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Primary Dealers in Government Securities: Policy Issues and Selected Countries Experience

Marco Arnone and George Iden

No 2003/045, IMF Working Papers from International Monetary Fund

Abstract: In many countries, authorities have designated a group of financial firms as the principal intermediaries in the government securities market-referred to as "primary dealers" or a "primary dealer system." This paper discusses policy issues related to the establishment of a primary dealer system for countries that may be considering taking this step. In this regard, a key issue is 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. This paper 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.

Keywords: WP; dealer system; dealer; market; secondary market; Primary dealers; public debt management; market structure; PD market participant; dealers activity; dealer status; market-making responsibility; securities transaction; price discovery; issuer policy; market liquidity; Government securities; Securities markets; Open market operations; Securities; Liquidity; Australia and New Zealand; Global (search for similar items in EconPapers)
Pages: 65
Date: 2003-03-01
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Citations: View citations in EconPapers (16) Track citations by RSS feed

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Handle: RePEc:imf:imfwpa:2003/045