BANK OF UGANDA
Remarks by
Prof. Emmanuel Tumusiime-Mutebile,
Governor, Bank of Uganda
The Annual Primary Dealer of the Year Award
Ceremony
03 April 2017
The Chief Executives and Senior Staff of Banks
Present
Distinguished guests
Ladies and gentlemen
Good afternoon.
It is my pleasure to welcome you to the 12th
Annual Primary Dealer Award Ceremony.
The Primary Dealer System aims to promote
participation in government securities markets, to
foster the development of financial markets, to
improve the secondary market trading system as
well as to ensure efficiency in the operations
related to the Government securities market at the
central bank.
Primary Dealers have contributed to the growth of
the Government securities market by ensuring
high demand during primary market auctions.
In 2016, the ratio of primary dealer successful bids
in the auctions relative to the rest of the market
was 61 percent of all auction bids.
The auction bid to cover ratio, which is the total
size of bids relative to the amount tendered, for
treasury bills and bonds in 2016 averaged 1.21,
indicating that demand for government securities
is strong and sufficient to accommodate the needs
of Government for domestic finance.
Primary Dealers have also enhanced liquidity in
the secondary market. Total turnover in the
secondary market increased by 12.5 percent to
UGX 3.6 trillion in 2016 from UGX 3.2 trillion in
2015.
However, there remain challenges in the
distribution mechanism of Government securities,
and we would like to see more vibrancy in the
secondary market. Therefore, the Bank of Uganda
(BoU) has introduced some changes in the way the
primary dealership system will operate.
Going forward, all commercial banks will have
similar access to the Central Securities Depository
(CSD). All the banks will be able to open CSD
accounts at the BoU for their clients, issue and
accept bid submission forms on their client's
behalf, and facilitate their clients' secondary
market transactions.
Investors will also access their CSD account
statements through their respective commercial
banks.
Our expectation is that we will have more
participants in the primary market and a more
liquid, efficient, competitive, and attractive
secondary market for Government securities.
The BoU will maintain a consultative approach
with the market participants and other
stakeholders so as to bring on board constructive
initiatives that will further develop the financial
markets in Uganda.
I applaud the contribution of the primary dealer
banks towards the development of the
Government securities market, and by extension,
the financial markets in Uganda.
Before I conclude this speech, I also want to
announce that after this ceremony there will
immediately be a Press Release on the reforms to
the primary dealer system.
The Press Release is meant to inform the public
that all licensed commercial banks will now have
direct access to the primary market for
Government security operations and commercial
banks are all eligible to open CSD accounts at BOU
for their clients, they are all able to issue and accept
bid submission forms on their clients behalf, settle
their clients' successful bids and buy their clients'
securities if the client wishes to sell. This is part of
BOU's on-going commitment to make investing in
Government Securities easier and more accessible
to the public.
I also wish to acknowledge the role that this year's
award winner has played, especially for its
participation in the primary auctions, market
making capabilities, consistent pricing as well as
timely market intelligence.
Ladies and gentlemen, I am pleased to announce
that this year's winner has emerged at the top for
the fifth consecutive year, Stanbic Bank Uganda
Ltd is the primary dealer of the year 2016.
I now invite the Chairman, Board of Directors of
Stanbic Bank, Mr Japheth Katto, to receive the
award. Congratulations to you and your team.
I thank you for listening to me.