InvestorQ : What is meant by primary dealers (PDs) and satellite dealers in the bond markets?
Ria Jain made post

What is meant by primary dealers (PDs) and satellite dealers in the bond markets?

Answer
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1 year ago


Primary Dealers (PDs) can be referred to as Merchant Bankers to Government of India, comprising the first tier of the government securities market. Satellite Dealers work in tandem with the Primary Dealers forming the second tier of the market to cater to the retail requirements of the market.

These PDs and SDs were formed during the year 1994-96 to strengthen the market infrastructure and put in place an improvised and an efficient secondary government securities market trading system and encourage retailing of Government Securities on large scale.

Let us now look at the specific role that primary dealers play, which inter alia includes the follow key tasks…

Commit participation as Principals in Government of India issues through bidding in auctions

Provide underwriting services

Offer firm buy - sell / bid ask quotes for T-Bills & dated securities

Development of Secondary Debt Market

The satellite dealers work with the PDs in the same way as franchisees and the sub brokers help the principal brokers to reach out for last mile marketing.