IPDC OF BANGLADESH LIMITED EC PAPER

MEMBERSHIP WITH PRIMARY DEALERS OF BANGLADESH LIMITED (PDBL)

19th June 2011

Introduction: In order to develop a vibrant Government Securities (Bills & Bonds) Market, Bangladesh Bank introduced licenses for Primary Dealership to financially sound banks and financial institutions free of cost. Assuming that this will be another route of income generation in the future, IPDC obtained the license of Primary Dealership and holds BDT 1.58 billion in these securities till 31 May, 2011. But the Market is still in growing phase and the secondary trading of these securities is insignificant till date. Primary Dealership business is not that profitable as assumed earlier. Even some of its members are trying in vain to surrender their licenses to Bangladesh Bank. Now Primary Dealers Bangladesh Limited (PDBL), the association of the Primary Dealers in Bangladesh formed in November, 2008, endeavors either to develop the market with the help of all out support from Bangladesh Bank and Ministry of Finance to make this business profitable and sustainable or to surrender all the licenses of its members to Bangladesh Bank. Thus PDBL becomes the common platform of all the primary dealers to fight for the common interest of its members. Moreover, PDBL renders necessary assistance and services to its members and promote high standards of commercial, legal and regulatory practices including directives issued from time to time by Bangladesh Bank and function in the vested interest of the dealers. Some of the major issues taken by PDBL are introduction of electronic bidding system and market driven interest rate of Government securities, buy back option of securities by Government, standing facility against Repo etc. At present, the association (PDBL) has fifteen members including 12 banks and 3 financial institutions. To be the member of this association, a nominal amount of BDT 500,000 is required as one time fee along with the annual subscription fee of BDT 200,000.

Submission: Management sincerely believes that membership of PDBL will help IPDC to achieve its target regarding the trading of Government securities in the market or surrendering its membership in joint effort with the other primary dealers. This paper is presented for kind approval