How to bid for primary treasury bonds from BO accounts
Like banks, stock market investors too have been allowed to bid in the primary auction of treasury bonds through their brokers, and the securities regulator has issued a detailed directive in this regard on Thursday (22 June).
The stock exchanges will publish the central bank's treasury bond auction schedule so that investors remain informed, according to the Bangladesh Securities and Exchange Commission (BSEC) directive.
Treasury bonds are issued by the government and are assumed to be of the lowest default risk. All the treasury bonds are tradable on the stock exchanges, alongside the old market infrastructure module of the Bangladesh Bank where member dealer (MD) banks participate in buying and selling.
Keep updated, follow The Business Standard's Google news channel
Each broker will have to have a beneficiary participant identification number (BPID) at the central bank ecosystem through an MD bank, alongside an omnibus beneficiary owner (BO) account dedicated for primary treasury auction participation.
An omnibus account is a big BO account opened by a broker for buying and selling many of its clients' securities. However, the dedicated omnibus account will be used for only buying primary treasury bonds and transferring them to the respective ultimate investors' BO accounts.
When a stock market investor asks its broker to bid in a treasury auction, the broker would ensure the collection of needed money from its client and bid for the said bonds during issuance. After successful bids, the broker will have to transfer the bonds to investors' BO accounts from the omnibus account, and submit the process accomplishment report to the regulators within three days of the bidding.
Primary auction allows an investor to buy treasury bonds at face value, while secondary market prices go up or down later. Bid size will be at least Tk1 lakh or multiples of that.
