Government Strengthens Evaluation of National Treasury Bond Primary Dealers' Acquisition Performance to Promote Competition

The government has decided to promote competition among Treasury Bond Primary Dealers (PDs) to smoothly absorb the increasing issuance volume of government bonds.

The PD evaluation criteria will be reorganized to focus on actual Treasury Bond underwriting performance, and the differentiation in low-interest loans from the Public Fund Management Fund (PFMF) lent to PDs based on evaluation results will be strengthened.

On the 1st, the Ministry of Economy and Finance announced the "Plan to Strengthen Treasury Bond Underwriting Capability through Promoting Competition in the Issuance Market" containing these details.

PDs are financial institutions that participate in Treasury Bond issuance bidding and fulfill market-making obligations in the Treasury Bond secondary market. The government operates the PD system to ensure smooth issuance and circulation of Treasury Bonds.

The government decided to promote competition among PDs to ensure stable Treasury Bond issuance. This is in response to the expectation that the issuance volume of Treasury Bonds will remain high for the time being due to the maturity of bonds issued during the COVID-19 period.

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The government will reorganize the PD evaluation system to focus on the PDs' obligation of Treasury Bond underwriting. The score for underwriting-related evaluation will increase from 43 points (out of 100) to 48 points. The actual underwriting bonus points will be expanded from 3 to 9 points, and the underwriting evaluation criteria will be reorganized to focus on actual underwriting performance.

Incentives based on PD evaluation results will also be strengthened. The scale of PFMF low-interest loans lent to PDs will be differentiated according to evaluation results. The government lends surplus PFMF resources to PDs at low interest rates.

Additionally, a fast-track system will be established to promptly promote excellent Preliminary Primary Dealers (PPDs) to PDs, while strictly taking measures against PDs who fail to fulfill their obligations, thereby actively facilitating PD entry and exit.

The temporary measure to expand non-competitive underwriting authority per PD, implemented during the COVID-19 crisis, will be normalized from next year as originally planned. The government plans to revise related regulations next month and implement the reorganized evaluation from next year.

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