A primary dealer is a firm that buys government securities directly from a government, with the intention of reselling them to others, thus acting as a
market maker
A market maker or liquidity provider is a company or an individual that quotes both a buy and a sell price in a tradable asset held in inventory, hoping to make a profit on the difference, which is called the ''bid–ask spread'' or ''turn.'' Thi ...
of government securities. The government may regulate the behaviour and number of its primary dealers and impose conditions of entry. Some governments sell their securities only to primary dealers; some sell them to others as well. Governments that use primary dealers include Australia, Belgium, Brazil, Canada, China, France, Hong Kong, India, Ireland, Hungary, Italy, Japan, Pakistan, Singapore, Spain, Sweden, the United Kingdom, and the United States.
Primary dealers by country
Canada
As of 20 January, 2025, the Bank of Canada identifies the following primary dealers:
Treasury bills
*
Bank of Montreal
*
Canadian Imperial Bank of Commerce
*
Desjardins Securities Inc.
*
Laurentian Bank Securities Inc.
*
National Bank Financial Inc.
*
RBC Dominion Securities Inc.
*
Scotia Capital Inc.
*
The Toronto-Dominion Bank
Bonds
*
BMO Nesbitt Burns Inc.
*
Casgrain & Company Limited
*
CIBC World Markets Inc.
*
Desjardins Securities Inc.
*
Merrill Lynch Canada Inc.
*
Laurentian Bank Securities Inc.
*
National Bank Financial Inc.
*
RBC Dominion Securities Inc.
*
Scotia Capital Inc.
*
The Toronto-Dominion Bank
European Union
, the
European Commission
The European Commission (EC) is the primary Executive (government), executive arm of the European Union (EU). It operates as a cabinet government, with a number of European Commissioner, members of the Commission (directorial system, informall ...
of the
European Union
The European Union (EU) is a supranational union, supranational political union, political and economic union of Member state of the European Union, member states that are Geography of the European Union, located primarily in Europe. The u ...
identifies the following 37 primary dealers:
*
Banco Bilbao Vizcaya Argentaria S.A.
*
Banco Santander S.A.
*
Barclays Bank Ireland Plc
*
BNP Paribas S.A.
*
BofA Securities Europe S.A.
*
Bred Banque Populaire
*
CaixaBank S.A.
*Cecabank S.A.
*
Citigroup Global Markets Europe AG
*
Commerzbank AG
*
Credit Agricole Corporate and Investment Bank S.A.
*
Danske Bank
Danske Bank A/S (, ) is a Danish multinational banking and financial services corporation. Headquartered in Copenhagen, it is the largest bank in Denmark and a major retail bank in the northern European region with over 5 million retail custome ...
A/S
*
Deutsche Bank AG
*
DZ Bank AG Deutsche Zentral-Genossenschaftsbank
*
Erste Group Bank AG
*
Eurobank S.A.
*
Goldman Sachs Bank Europe SE
*
HSBC Continental Europe S.A.
*
Intesa Sanpaolo S.p.A.
*
J.P. Morgan SE
*
KBC Bank N.V.
*
Landesbank Baden-Württemberg
*
Morgan Stanley Europe SE
*
MPS Capital Services Banca per le Imprese S.p.A.
*
National Bank of Greece S.A.
*
Natixis S.A.
*
Natwest Markets N.V.
*
Nomura Financial Products Europe GmbH
*
Nordea Bank Abp
*
Piraeus Bank S.A.
*
Raiffeisen Bank International AG
*
Royal Bank of Canada Capital Markets (Europe) GmbH
*
Skandinaviska Enskilda Banken AB (SEB)
*
Societe Generale S.A.
*
Swedbank AB
*
TD Global Finance Unlimited Company
*
UniCredit Bank AG
Hong Kong
,
Hong Kong
Hong Kong)., Legally Hong Kong, China in international treaties and organizations. is a special administrative region of China. With 7.5 million residents in a territory, Hong Kong is the fourth most densely populated region in the wor ...
identifies the following 10 primary dealers, with two-year terms, ending 30 September 2023:
*Bank of China (Hong Kong) Limited
*Bank of Communications Company, Limited
*BNP Paribas, Hong Kong
*Citibank N.A.
*Credit Agricole Corporate and Investment Bank
*DBS Bank (Hong Kong) Limited
*Hang Seng Bank Limited
*The Hongkong and Shanghai Banking Corporation Limited
*Societe Generale
*Standard Chartered Bank (Hong Kong) Limited
Ireland
As of April 2021, the
National Treasury Management Agency of Ireland identifies the following 14 primary dealers
*
Barclays Bank Ireland
*
BNP Paribas Paris
*
BofA Securities Europe
*
Cantor Fitzgerald Ireland
*
Citigroup Global Markets Europe
*
Danske Bank Copenhagen
*
Deutsche Bank Frankfurt
*
Goldman Sachs Bank Europe
*
Goodbody Stockbrokers
*
HSBC France
*
JP Morgan Frankfurt
*
Morgan Stanley Europe
*
Natwest Markets N.V.
*
Nomura Financial Products Europe GmbH
United States
In the
United States
The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...
, a primary dealer is a
bank
A bank is a financial institution that accepts Deposit account, deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital m ...
or securities
broker-dealer
In financial services, a broker-dealer is a natural person, company or other organization that engages in the business of trading securities for its own account or on behalf of its customers. Broker-dealers are at the heart of the securities and ...
that is permitted to trade directly with the
Federal Reserve System
The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a series of ...
("the Fed").
[Federal Reserve Bank of New York: Primary Dealers](_blank)
Retrieved August 16, 2023. Such firms are required to make bids or offers when the Fed conducts
open market operations, provide information to the Fed's open market trading desk, and to participate actively in
U.S. Treasury securities auctions.
[Federal Reserve Bank of New York:Primary Dealer Policies](_blank)
Retrieved March 12, 2008 They consult with both the U.S. Treasury and the Fed about funding the
budget deficit and implementing
monetary policy
Monetary policy is the policy adopted by the monetary authority of a nation to affect monetary and other financial conditions to accomplish broader objectives like high employment and price stability (normally interpreted as a low and stable rat ...
. Many former employees of primary dealers work at the Treasury because of their expertise in the government debt markets, though the Fed avoids a similar
revolving door policy.
The current system of primary dealers was set up in 1960 with 18 dealers. The number of primary dealers grew to 46 in 1988, declined to 21 by 2007, increased to 24 by July 2019, then to 25 in April 2022.
The relationship between the Fed and the primary dealers is governed by the
Primary Dealers Act of 1988 and the Fed's operating policy "Administration of Relationships with Primary Dealers."
Operating Policy
Federal Reserve, January 11, 2010. Retrieved October 5, 2011
Primary dealers purchase the vast majority of the U.S. Treasury securities (T-bills, T-notes, and T-bonds) sold at auction, and resell them to the public. Their activities extend well beyond the Treasury market. For example, according to the '' Wall Street Journal Europe'' (2/9/06 p. 20), all of the top ten dealers in the foreign exchange market
The foreign exchange market (forex, FX, or currency market) is a global decentralized or over-the-counter (OTC) market for the trading of currencies. This market determines foreign exchange rates for every currency. By trading volume, ...
are also primary dealers, and between them account for almost 73% of foreign exchange trading volume. Arguably, this group's members are the most influential and powerful non-governmental institutions in global financial markets. Group membership changes slowly, with the current list available from the New York Fed.Barclays
Barclays PLC (, occasionally ) is a British multinational universal bank, headquartered in London, England. Barclays operates as two divisions, Barclays UK and Barclays International, supported by a service company, Barclays Execution Services ...
, Deutsche Bank
Deutsche Bank AG (, ) is a Germany, German multinational Investment banking, investment bank and financial services company headquartered in Frankfurt, Germany, and dual-listed on the Frankfurt Stock Exchange and the New York Stock Exchange.
...
and NatWest Group distribute the debt to European buyers. Goldman Sachs, and Citigroup account for many American buyers. Nevertheless, most of these firms compete internationally and in all major financial centers.
In response to the subprime mortgage crisis and to the collapse of Bear Stearns
The Bear Stearns Companies, Inc. was an American investment bank, securities trading, and brokerage firm that failed in 2008 during the 2008 financial crisis and the Great Recession. After its closure it was subsequently sold to JPMorgan Chas ...
, on March 19, 2008, the Federal Reserve
The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a series of ...
set up the Primary Dealers Credit Facility (PDCF), whereby primary dealers could borrow at the Fed's discount window
Discount may refer to:
Arts and entertainment
* Discount (band), punk rock band that formed in Vero Beach, Florida in 1995 and disbanded in 2000
* ''Discount'' (film), French comedy-drama film
* "Discounts" (song), 2020 single by American rapper C ...
using several forms of collateral including mortgage-backed loans. The PDCF was closed on February 1, 2010.[Federal Reserve Bank of New York:Primary Dealer Credit Facility FAQ](_blank)
Retrieved March 20, 2008
Primary dealers with the Federal Reserve Bank of New York
, the New York Fed identifies the following 24 primary dealers:
References
External links
NY Federal Reserve - Primary Dealers
{{Bond market
Federal Reserve System