Primary Dealers

A primary dealer is a financial institution that has been authorized by a government to trade in its debt securities. Primary dealers are typically large investment banks or securities firms that have a strong presence in the government securities market. They are responsible for providing liquidity to the government securities market by buying and selling government securities in the open market. Primary dealers are also responsible for providing market intelligence to the government and for acting as intermediaries between the government and other market participants.

History of Primary Dealers

The concept of primary dealers originated in the United States in the early 20th century. The Federal Reserve Bank of New York (FRBNY) was the first to establish a primary dealer system in 1917. The FRBNY authorized a select group of banks to act as primary dealers in government securities. This system was designed to provide the FRBNY with a reliable source of market information and to facilitate the implementation of monetary policy. Since then, the primary dealer system has been adopted by other countries, including the United Kingdom, Japan, and the European Union.

Comparison of Primary Dealers

Summary

Primary dealers are financial institutions that have been authorized by a government to trade in its debt securities. They are responsible for providing liquidity to the government securities market by buying and selling government securities in the open market. Primary dealers also provide market intelligence to the government and act as intermediaries between the government and other market participants. For more information about primary dealers, visit the websites of the Federal Reserve Bank of New York, the Bank of England, the Bank of Japan, and the European Central Bank.

See Also

• Government Securities
• Monetary Policy
• Open Market Operations
• Securities Market
• Debt Securities
• Market Intelligence
• Intermediaries
• Federal Reserve Bank of New York
• Bank of England
• Bank of Japan
• European Central Bank

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