Temporary 2Q Measures to Strengthen PD Acquisition Capacity Extended Through 3Q
Improvement Measures for the Government Bond Issuance Market System in Q3 2020
[Asia Economy Reporter Kwangho Lee] The government will extend the temporary measures in the second quarter to strengthen the underwriting capacity of government bond primary dealers (PD) until the third quarter. It will also promote the expansion of strip conditional non-competitive allotment volumes and improve the penalty system.
The Ministry of Economy and Finance announced on the 25th that it has prepared such institutional improvement plans to stabilize the government bond issuance market in the third quarter of this year and will implement them starting from the July government bond issuance plan.
First, the temporary measures in the second quarter to strengthen PD underwriting capacity will be extended. However, the extension of the non-competitive allotment exercise period (+1 business day (Friday)) will be terminated.
The Ministry of Economy and Finance evaluates that the temporary measures in the second quarter had a positive effect on the government bond bidding and issuance market.
In addition, improvement plans for issues raised during the government bond issuance and market management process will be prepared. These include improvements to the strip conditional non-competitive allotment system, operation and evaluation method improvements of the exchange system, and the establishment of a post-remedy mechanism for erroneous trades in the government bond market.
Furthermore, as of the 26th, new preliminary government bond primary dealers (PPD) will be designated and some designations will be canceled.
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Two companies, Eugene Investment & Securities and Kiwoom Securities, will be newly designated after evaluation of financial, personnel, and performance requirements under the government bond primary dealer operation regulations, while designations of three companies?JP Morgan Bank, ING Bank, and SK Securities?will be canceled considering that they meet the cancellation criteria for PPD designation and have no intention to maintain PPD qualifications.
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