Bank of Uganda appoints 8 banks as Primary Dealer Market Makers

Bank of Uganda (BoU) has appointed eight (8) commercial banks as Primary Dealer Market Makers effective October 1, 2023, for three years.

The banks are;  ABSA Bank, Centenary Bank, Citibank, DFCU Bank, Equity Bank, Housing Finance Bank, Stanbic Bank and Standard Chartered Bank

This follows BoU’s request for Expressions of Interest (E0I) to all commercial banks and the conclusion of an evaluation process.

In October 2020, BoU adopted a primary dealership system with Primary Dealer Market Maker (PDMM) banks being given exclusive access to the primary market for Government Securities. PDMM banks are responsible for providing liquidity and pricing in the government securities market.

According to Kenneth Egesa, on behalf of the Director of Communications at BoU, the PDMM system has been highly successful in increasing liquidity in the Government securities market and attracting both institutional and offshore investors.

“Secondary market turnover has grown from 40% to 160% of the total debt stock. Also, the Government securities market has earned a notable listing on the FTSE Russell Frontier Markets Index, elevating Uganda’s presence, and recognition in the global financial markets,” he said in a statement issued on Monday.

Further, he said, the PDMM system and other market reforms have led to the improvement in Uganda’s ranking in the Absa African Financial Markets Index (AFMI), from 10th place in 2020 to 4th place in 2022 out of 26 African Countries.

“The BoU is confident that the PDMM banks will continue to play a vital role in developing the Government securities market in Uganda,” Egesa explained.

BoU urged investors to continue submitting their bids to their respective commercial banks as usual and that competitive bidding in the primary market for Government Securities shall still be limited to only PDMM banks.