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The Bangladesh Bank (BB) has started reviewing the performance of the primary dealers (PDs) to activate the country's secondary bond market, official sources said.
The central bank has taken the move for increasing transactions of the government approved securities and bonds in the market to create a new window for investments, the sources added.
Earlier, the BB appointed eight commercial banks and one non-banking financial institution (NBFI) as PDs in late 2003 to handle the government bonds and securities. However, there has been insignificant development towards creation of an active secondary market since then.
"We are reviewing whole system for the improvement of the secondary market," a BB senior official told the FE Wednesday, adding that the central bank is now working to bring dynamism in the market through streamlining the existing guidelines.
Besides, an International Monetary Fund (IMF) mission is now working to improve the country's bond market in line with international practices, sources in the central bank said.
On the other hand, a focus group on secondary market and settlement systems of bond market has already submitted its report to the central bank for taking necessary measures to gear up the market.
The group has recommended that the license of PDs should be reviewed on an annual basis and a six-month grace period should be allowed to the PDs to achieve the desired level to retain the license.
"The PDs need to be trained for handling large volumes of securities' trading in the market," the group said in its report, adding that the PDs must have a large capital base, strong managerial and trading capabilities and a comprehensive information technology (IT) platform.
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