Government securities system to be improved
Posted Monday, February 4 2013 at 02:46
Impact. The upgrade will allow real time reporting and viewing of market activity.
In the next two months, the electronic system of trading government securitites at the Central Bank will be upgraded to create an efficient debt market.
The upgrade in trading government securities, (Treasury bills and bonds) is among the many reforms that the Bank of Uganda is implementing in Uganda’s debt market to make it more attractive and vibrant to investors.
Speaking during the award giving ceremony for the best Primary Dealer in government securities for 2012 last week, the governor Bank of Uganda, Mr Emmanuel Tumusiime Mutebile, said upgrading the Reuters system to allow real time reporting and viewing of market activity; thereby enhancing transparency and minimising price distortions is in final stages of implementation.
“The first stage of the upgrade, involving 10 commercial banks, is expected to be ready by the end of March this year and the second stage, involving all the remaining banks, by June,” he said.
Mr Mutebile explained that the enhanced Central Securities Depositary (CDS) system is in the final stages of the user acceptance testing; pointing out that among the benefits to market participants will be electronic bidding, trading and reporting. “We hope that CDS can go live in April of this year,” said Mr Mutebile.
The other reform that is ready for implementation this year in government securities is the securities pricing matrix that will provide a yield curve for all on-the- run and off-the-run government securities. It has been finalised and will shortly be posted daily on BoU website and the Reuters information.
However, Mr Mutebile cautioned that generating a daily yield curve will require the primary dealers to provide two-way secondary market price quotes timely.
Mr Muteile also said BoU is working closely with the Ministry of Finance, Planning and economic Development to improve the predictability of government debt issuance through the introduction of a bond calendar and to further improve market liquidity by issuing benchmark bonds.
For some time, the BoU has been proposing to open up the bond market for non-bank financial institutions to begin participating in the auctioning licensing like it has done with the six commercial banks who are the primary dealers.