Non-bank primary dealers set for June in Uganda

Mutebile pointed out that demand for bonds and bills was more than twice that recorded in the years 2009 to 2011

By Samuel Sanya
THE central bank has announced a wave of reforms that will see non-bank institutions participate directly in Uganda’s thriving debt market come June this year.
Yields on Uganda’s three year treasury instruments have risen as high as 21% as the Bank of Uganda (BoU) battles high inflation through reducing money in circulation.
“The enhanced Central Securities Depository system is expected to go live by June this year….the debt reforms that will lead to the introduction of non-bank broker/dealers in the debt market are on-going,” said Emanuel Mutebile the BoU governor.
He was speaking at the Primary Dealer of the year award ceremony in Kampala where Stanbic Bank Uganda was pronounced winner for the year 2011. 
Mutebile pointed out that demand for bonds and bills was more than twice that recorded in the years 2009 to 2011 on the primary market with demand on the secondary market growing by 35%.
Uganda currently uses a primary dealer system where six banks are authorized to compete for treasury instruments from the central bank, later reselling the same to the public on the secondary market.
The Central bank intends to introduce a bond calendar to improve predictability and regularize debt issuance, in addition to upgrades of the banks Reuters system, website and Central Securities Depository system.
The changes will see the introduction of e-bidding, automated repo auctions, on-line secondary market trading, to enhance transparency while minimizing price distortions in the market.
Stephen Kaboyo, the BoU director for financial markets said that the reforms will enable investors to plan their cash flows better and diversify their investments.
He noted that brokerage firms, and pension funds have already expressed interest in joining the six banks in the primary dealer system.
Philip Odera, the Stanbic bank boss hailed the changes saying that reforms will widen and deepen participation in Uganda’s debt market, strengthening the economy in all ways.
http://www.newvision.co.ug/news/629499-non-bank-primary-dealers-set-for-june.html