BoU Deputy Governor, Michael Atingi-Ego handing over the award of the best performing PDMM in Uganda Government securities during the period October 2020 to September 2021, to Standard Chartered Bank CEO/Managing Director , Albert Saltson
Banks and market players transacted UGX 42.71 trillion in Secondary Market during the Period October 2020 – September 2021, compared to UGX 10.9 trillion before the Primary Dealer Market Maker (PDMM) system.
The revelation was made by Michael Atingi-Ego, the Deputy Governor at Bank of Uganda during the Annual Award Event for the Best Performing Primary Dealer Market Maker in the Government Securities Market during the Period October 2020 – September 2021 held on January 19, 2022 at the Bank’s head offices.
The Bank of Uganda appointed seven commercial banks in October 2020 to be the Primary Dealer Market Makers (PDMMs) for a period of three years. “This aligned our financial market with international best practice and our market is now amongst a handful of African countries with a functional PD system. As of October, last year, United Bank for Africa was appointed as the eighth PDMM,” Atingi-Ego said.
He added: “I applaud the PDMMs for mobilizing over UGX 12.0 trillion in the scheduled calendar auctions, in the primary market, during the period October 2020 to September 2021. Also, an additional UGX 1.4 trillion was raised through private placement auctions. In the secondary market, I applaud all the banks and market players because UGX 42.71 trillion was transacted during the same period, compared to UGX 10.9 trillion before the PDMM system. This is an increase of 288.9%.”
The Bank of Uganda initially launched the Primary Dealer (PD) System in 2005 with the aim of promoting participation in the government securities markets, fostering the development of financial markets, improve the secondary market trading system and enhance Government securities market efficiency and operations.
Further, as part of our commitment to further develop the Government securities market and the financial market, BoU launched reforms to the PD System in 2016.
“The objective is to develop the secondary market which will provide an enabling environment to raise capital as well as provide benchmark pricing for other 3 private sector assets classes including loans, corporate bonds, among others,” Atingi-Ego said.
He added that BoU is prioritizing global visibility of Government securities and therefore PDMMs need to comply with the obligation to post two-way prices at all times during trading hours.
“This will enable us to join the Bloomberg African Bond Indices (ABABI). The African Development Bank administers the ABABI, a family of African bond indices launched in 2015 and calculated independently by Bloomberg. Frontier and emerging market indices, such as the ABABI, the FTSE Frontier Market Index, and the JP Morgan Emerging Market index, among others, are a reliable tool for international investors to measure and track our bond market while providing us with opportunities to diversify our funding instruments, boost transparency and widen our investor base,” he said.
He said the Bank is also in advanced stages to ensure that the financial markets can conduct borrowing and lending of securities.
“This we are optimistic will improve on liquidity in the various tenors of the yield curve but also modernise our financial market and attract more global and domestic investors,” he said.
Standard Chartered Bank Uganda Limited was announced as the best performing PDMM in Uganda Government securities during the period October 2020 to September 2021.
