The Evolution of the Government of Canada's Debt Distribution Framework
This overview includes a brief history highlighting the government's use of the primary and secondary markets to develop a framework for distributing its debt securities to financial market intermediaries and end investors. The framework is also intended to meet the government's debt-strategy objectives of raising stable, low-cost funding and maintaining a well-functioning debt market. Pellerin reviews the government's adoption of a new framework in 1998 as well as the 2005 modifications aimed at attracting continued broad and competitive participation in government auctions.
Primary Dealers in Government Securities: Policy Issues and Selected Countries' Experience
In many countries, authorities have designated a group of financial firms as the principal intermediaries in the government securities market-referred to as primary dealers or a primary dealer system. This paper discusses policy issues related to the establishment of a primary dealer system for countries that may be considering taking this step. In this regard, a key issue is whether a primary dealer system fits into the overall strategy for financial market development in the country. Under a primary dealer system, the debt manager and the group of primary dealers pursue a common strategy in support of the effective functioning and development of primary and secondary markets for government securities. This paper presents results of a survey of country practices conducted in early 2001. Among the countries surveyed, there was broad agreement among authorities that a primary dealer system is to be highly recommended.
Government Securities: Primary Issuance
This Handbook discusses different possible approaches to the primary issuance of government debt, that is to say, the point at which the debt - normally in securitised, or tradable, form - is first sold by the government to the non-state sector. The main focus of the Handbook is on auctions of tradable debt, in part because this is the means predominantly used by developed, developing and transitional countries which issue debt to the non-state sector to finance the government’s deficit. But it also covers other means of selling tradable debt, and some aspects of non-tradable debt. The Handbook considers some of the key factors affecting uncertainty and demand in the primary market. In general there will be a cost to uncertainty (where investors are unsure about a number of aspects of the debt issuance programme), and to exclusivity (where access to part or all of the primary market is restricted in some way). But uncertainty may be the counterpart to a measure of flexibility, and exclusivity the counterpart to manageability. Debt managers need to decide where, in view of the structure and state of development of their markets, to make the trade-offs. The Handbook also discusses a number of practical operational issues. An Appendix describes in detail some of the features of index-linked securities. An earlier Handbook (No.5 The management of government debt, see Related Links) discussed the relative merits of fixed and floating interest securities, but covered indexed securities only briefly. This handbook is also available in Russian and Spanish.