Secondary trading of treasury bills and treasury bonds has dropped sharply during the last fiscal year, reflecting the lower demand for the government securities.
Latest statistics with the central bank showed that the total value of secondary trading of T-bills and T-bonds stood at Tk 153.30 billion during FY18, down from Tk 400.51 billion a year earlier.
The transaction of these tradable government securities is generally divided into
two types -- outright transaction and repo transaction.
Outright transaction means direct trading of the issued securities while repo transaction means trading of already traded T-bills and T-bonds.
T-bills are short-term government securities while T-bonds are long-term in nature.
Currently, there are three types of T-bills in terms of maturity. These are: 91 days, 182 days and 364 days.
T-bonds are matured in two years, five years, 10 years, 15 years and 20 years.
Bangladesh Bank statistics also showed that the total value of secondary trading of bills and bonds was Tk 675.31 billion in FY16.
This means the secondary trading of the government securities has been declining for the last two years mainly due to the negative issuance of the government securities.
Primary issuance of T-bills and T-bonds stood at Tk 706.12 billion in FY17, which was Tk 861.18 billion in FY16.
Data for the full year is not available yet.
Central bank statistics showed that primary issuance of T-bills and T-bonds stood at Tk 227.0 billion in the first four months (July-October) of FY18.
In case of secondary transaction, there are two automated mechanisms: over-the-counter (OTC) and trader-worker-station (TWS).
The central bank said that OTC trading dropped to Tk 325.28 billion in FY17 from Tk 675.13 billion in FY16.
On the other hand, there was almost no TWS trading in FY16, which stood at Tk 75.29 billion in FY17.
The complete data for OTC and TWS trading in FY18 is not available yet.
Primary dealers are the dominant trading institutions in the secondary market of the government securities.
Currently, 21 banks are performing as primary dealers and can participate directly in the primary auctions.
Other banking and non-banking investors can participate in primary auctions and in secondary trading through their nominated primary dealers.