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Analysis Of The Primary Dealers Function

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  • Vesna Martin

Abstract

The purpose of this paper is to examine the role of primary dealers, whose introduction promotes the development and trading of securities on the primary market while also making government securities easier to place. As a result, primary dealers act as a bridge between the government and large institutional investors. Their active role increases secondary market liquidity, which can potentially lead to an increase in investor base, simplification of the trading process, and reduction of transaction costs. As a result, borrowing costs for securities issuers are reduced, which contributes to the continued development of financial markets. In this paper we will examine the selection criteria and obligations of primary dealers, as well as their role in capital market development and monetary policy implementation. The final section of the paper focuses on the evolution of this function in Serbia. So far, regulatory changes in Serbia have enabled the function of primary dealers to be implemented, but they have not yet been implemented. Their implementation in Serbia would increase primary market liquidity, reduce the risk of debt financing, and contribute to the secondary market's further development.

Suggested Citation

  • Vesna Martin, 2023. "Analysis Of The Primary Dealers Function," Ekonomske ideje i praksa, Faculty of Economics and Business, University of Belgrade, issue 48, pages 53-65, March.
    • Handle: RePEc:beo:ekidpr:y:2023:i:48:p:53-65
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    File URL: https://www.ekof.bg.ac.rs/journals/eip/48/04.pdf
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    More about this item

    Keywords

    primary dealer; financial markets; security trading; underwriting; debt management;
    All these keywords.

    JEL classification:

    • D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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