By KT Reporter
All commercial banks that deal in government securities (Bills and Bonds) will now be required to get a license from the Capital Markets Authority (CMA).
Until now, while other players like brokers have been required to have a license from the CMA, banks were exempted since the Bank of Uganda already licensed them as financial institutions acting as primary dealers.
A primary dealer is a firm that buys government securities directly from a government, in this case, the Bank of Uganda, to resell them to others (on the secondary market), thus acting as a market maker of government securities.
Speaking at the handover to Standard Chartered Bank, the first Dealer License, Josephine Ossia Okui, the CMA Chief Executive Officer, said all banks operating as primary dealers must hand in their application for license by the end of this March.
She says after that, banks will then have three months as the licensing process is undertaken, and by July 1, 2025, no bank will be allowed to operate a dealership.
The amendments to the laws were based on the need to enhance financial deepening in the country, and also integrity in the fixed income markets, according to the CEO.
A more integrated market also helps increase accessibility of the services to the public, hence increasing liquidity and availability of capital in the market.
The reforms also saw the formation of the Uganda Fixed Income Committee with the duty of identifying the challenges hindering the growth of the market, developing the market infrastructure and streamlining the settlement processes.
Okui said some of the innovative initiatives by the committee are coming up with the regulations that will enable Sharia-compliant fixed income market operations.
Having received the first dealer’s license, Standard Chartered Bank vowed to operate within the provisions of the license to promote transparency and increase accessibility to the market.
Oscar Muwanga, Head of Markets at Standard Chartered Bank, said that the license is not only to enable them to buy and sell government securities, but it will enable them to act as an advisor on the government’s debt management, among others-URN. Give us feedback on this story through our email: kamwokyatimes@gmail.com
