As per the guidelines in Circular BB, primary dealers are defined as financial institutions that are authorized by the Bangladesh Bank to participate directly in the primary auctions of government securities. The primary objectives of primary dealers in Bangladesh, as per Circular BB, are as follows:

1.     Facilitate the distribution of government securities: Primary dealers are expected to participate in government securities auctions and purchase securities on behalf of their clients or for their inventory. By doing so, they help the government to finance its budget deficits and ensure a smooth distribution of securities to the market.

2.     Provide liquidity to the market: Primary dealers are expected to maintain an active presence in the market by buying and selling government securities on a daily basis. This helps to provide liquidity to the market and ensures that investors can easily buy and sell securities at fair prices.

3.     Act as intermediaries between the government and other market participants: Primary dealers are expected to act as intermediaries between the government and other market participants, such as investors, banks, and other financial institutions. They are expected to provide market information and analysis to their clients and help them to make informed investment decisions.

4.     Support the development of the government securities market: Primary dealers are expected to support the development of the government securities market by promoting transparency, efficiency, and fairness in the market. They are expected to comply with all relevant regulations and guidelines issued by the Bangladesh Bank and other regulatory authorities.

In summary, primary dealers in Bangladesh are expected to play an important role in facilitating the distribution of government securities, providing liquidity to the market, and supporting the development of the government securities market.

Roles and responsibilities of a PD

Primary dealers, also known as primary dealer banks or government securities dealers, are financial institutions that have a direct relationship with a country's central bank or monetary authority to participate in the buying and selling of government securities.

 The roles and responsibilities of Primary Dealers in Bangladesh, as per the Bangladesh Bank circular include:

1. Participating in Auctions: Primary Dealers are required to participate in the auctions of government securities held by Bangladesh Bank on behalf of themselves and their clients. They are also responsible for submitting competitive bids and providing two-way quotes for their clients and other market participants.

2.     Providing Market Liquidity: Primary Dealers are expected to provide liquidity to the government securities market by buying and selling government securities. They are also responsible for maintaining an active market for government securities by providing competitive quotes and ensuring market depth.

3.     Assisting in Monetary Policy Implementation: Primary Dealers help Bangladesh Bank implement monetary policy by providing information and feedback on market conditions and interest rates. They are also required to participate in open market operations, where Bangladesh Bank buys or sells government securities to influence the level of liquidity in the market.

4. Advising Clients: Primary Dealers advise clients on investment strategies and provide them with information on government securities. They also provide research and analysis on the economy and financial markets to their clients.

5. Meeting Regulatory Requirements: Primary Dealers must comply with regulatory requirements such as capital adequacy, risk management, and compliance with anti-money laundering laws. They are also required to report their trading activities and holdings of government securities to Bangladesh Bank.

Overall, Primary Dealers play a crucial role in the functioning of the government securities market in Bangladesh and help the Bangladesh Bank implement monetary policy.