- Dealers will lose licenses if found to be underperforming
- Government will stop paying brokerage fees to dealers
Ghana named 15 banks as primary dealers in the country’s bonds as the West Africa nation seeks to develop its domestic fixed-income market.
Only lenders licensed by the Securities and Exchange Commission and appointed by the central bank will participate in auctions to purchase government debt for their own account and trading purposes, Bank of Ghana said Tuesday in a statement on its website. The primary dealers shall also act as market makers for Treasury bills and bonds in addition to quoting buy and sell prices, it said.
The measures will assist in “the development of the fixed-income market and creating a favorable environment for private-sector investors to make and realize their investment decisions,” the central bank said.
The changes, which take effect from July 1, permit lenders including Access Bank Ghana Ltd., ARB Apex Bank Ltd., Barclays Bank of Ghana Ltd., CAL Bank Ltd., Ecobank Ghana Ltd., Fidelity Bank Ghana Ltd., First Atlantic Bank Ltd. and Ghana Commercial Bank to be primary dealers. The others are Guaranty Trust Bank Ghana Ltd., National Investment Bank Ltd., Universal Merchant Bank, UniBank Ghana Ltd., Societe Generale Ghana Ltd., Stanbic Bank Ghana Ltd. and Standard Chartered Bank Ghana Ltd.
The central bank dropped Agricultural Development Bank Ltd., United Bank for Africa Ghana Ltd. and Bank of Africa Ghana Ltd. from the list because they were not demanding enough bonds at the auctions, Louis Asu, chief treasury manager at the Bank of Ghana, said by phone. The state pension fund, Social Security and National Insurance Trust also lost its place because of not being a lender, he said.
Primary dealers will be assessed every six months and those found to be underperforming will be removed, Asu said. Apart from three-year and longer maturities that are sold through a book-build system, primary dealers must be prepared to take up every target set for two-year bonds and lower maturities, he said.
“If the target is declared, the primary dealers will have to share,” Asu said. “Every week you have to meet the government target, in that case there will be no shortfall of auctions.”
Primary dealers will no longer be paid brokerage fees by the government and will have to make money selling the securities to clients, Asu said.