explain importance of principle Dealership to the growth of bond futures markets in Malaysia.?

Expert Solution

A principle dealer system was introduced in January 1989 to address the issues relating to the size and liquidity in government bond markets. The system was installed aiming at improving government bond market. Selected banking institutions were appointed as principal dealers for the purpose of enhancing primary market participation and secondary market liquidity of government bonds.

For issuance of government and BNM papers, bids are submitted to BNM from all interbank players via principle dealers. Bids are transmitted electronically via our fully automated system for tendering

The introduction of dealer system resulted in increase in government bonds trading volume and turnover ratio. The system has helped in the growth of bond market by:

1. Providing a dependable and stable funding source of government securities.

2. Providing efficient distribution mechanism for government securities to investors.

3. Assisting government in debt management strategy and keeping informed of market developments.

4. Enhancing the liquidity in secondary market through continuous two way prices.

Thus the idea behind the dealer system was to overcome issues relating to liquidity in primary bond market and improve the trading schemes.

jeff jeffy answered 1 year ago

Importance of Capital Markets In 300 words, please explain the importance of capital markets to corporations....

Importance of Capital Markets In 300 words, please explain the importance of capital markets to corporations. What is the difference between a primary market and secondary market? How do these types of capital markets differ in their impact on corporations? What are some influences that may negatively impact capital markets and how can corporations help keep these influences stabilized? +3 References would be nice! Thanks in advance and answer will be definitely well-rated.

Explain the concept of the time value of money and the principle of compound growth, and...

Explain the concept of the time value of money and the principle of compound growth, and discuss the characteristics of common stock.

Define economic growth and explain the importance of increases in productivity in sustaining economic growth

3. After May 2020 collapse of the futures oil markets, what are the prospects of futures...

3. After May 2020 collapse of the futures oil markets, what are the prospects of futures contracts as a significant risk management tool for firms? Discuss critically.

Describe the process of long bone growth. Explain the importance of the epiphyseal plates.

importance of Critical Examination of Utilitarianism as a Moral Principle.

Explain how quality of life is a factor impacting urban growth. What are the three principle...

Explain how quality of life is a factor impacting urban growth. What are the three principle rights in property? What are the three dimensions of real property rights in land? What are fixtures? What are the four rules to help determine whether an object has become a fixture?

Crude oil is today sold under in contract markets, spot markets, and on futures exchanges. Provide...

Crude oil is today sold under in contract markets, spot markets, and on futures exchanges. Provide an example of the type of information that is revealed in market prices

What is the integration of bond markets. Explain why adverse conditions within one bond market (such...

What is the integration of bond markets. Explain why adverse conditions within one bond market (such as a particular country) commonly spread to other bond markets.

Before 1972, futures trading was dominated by agricultural commodities. The spectacular growth of financial futures now...

Before 1972, futures trading was dominated by agricultural commodities. The spectacular growth of financial futures now accounts for approximately 50% of all futures trading. Why are they so popular? Is there any risk?Which industry dominates the market?

Question