Bank of Uganda has appointed eight commercial banks, as Primary Dealer Market Markers (PDMM), and have been given exclusive access to the market for government securities.
PDMM will be responsible for providing liquidity and pricing in the government security markets, effective October 1, 2023, for three years.
In a statement released by Kenneth Egesa, the Director Communications Bank of Uganda on Monday 25, 2023, BOU adopted a primary dealership system with PDMM in October 2020.
Egesa has outlined the appointed banks as ABSA Bank, Centenary Bank, Citibank, DFCU Bank, Equity Bank, Housing Finance, Stanbic Bank, and Standard Chartered Bank, as PDMM for three years.
“The PDMM system has been highly successful in increasing liquidity securities market and attracting both institutional and offshore investors,” Egesa said.
Egesa noted that, the secondary market turnover has grown from 40% to 160% of the total debt stock, adding that the government securities market earned a notable listing on the Financial Times Stock Exchange (FTSE) Frontier Market Index, which specializes in the management of asset exchanges and creating index offerings for the global financial markets, uplifting Uganda’s pressure, and recognition in the global financial markets.
“PDMM system and other market reforms have led to the improvement in Uganda’s ranking in the Absa African Financial Market Index (AFMI), from the 10th position in 2020 to the 4th place in 2022, out of 26 African countries,” Egesa said.
He stated that, BOU is confident that PDMM banks will continue to play a vital role in developing the government securities markets in Uganda.
He advised investors to continue submitting their bids to their respective commercial banks as usual and competitive bidding in the primary market for government securities shall be limited to PDMM banks only.
Egesa added that, all commercial banks will access the primary market for non-competitive bids below Ugx 200 million, and Non- primary dealer banks will access government securities from PDMM banks in secondary market for all competitive bids below Ugx 200 million and above.
This follows BOU’S request for expressions of interest (EOI) to commercial banks and the conclusion of an evaluation process.
