A primary
dealer is a firm that buys government securities directly from a government,
with the intention of reselling them to others, thus acting as a market
maker of government securities. The government may regulate the behavior and
numbers of its primary dealers and impose conditions of entry.
1. To enhance liquidity and depth in the securities market by
facilitating price discovery
and turnover, encouraging voluntary holding of government securities
amongst a wide
investor base;
2.To develop under writing and market making capabilities for government
securities
amongst the market participants;
3. To facilitate efficient liquidity management, and open market
operations of monetary
policy management