The Bank of Uganda is scheduled to start electronic trading of bonds and government securities in November this year.
The director for financial markets department at Bank of Uganda, Stephen Kaboyo says this development will pave way for the direct inclusion of non-bank financial intermediaries in the trade.
“The electronic trading of bonds is part of the wider measures the bank wants to use to tone down the monopoly of commercial banks in the trade of government securities through the primary dealer model,” he explains.
He says the central bank wants to invite pension fund firms, insurance firms and brokerage dealers among others to compete with commercial banks in the capital markets.
He was speaking at the 10th annual bonds and equities workshop at the Kampala Serena Hotel. The meeting was attended by practitioners from the banking sector and dealers in bonds and government securities.
The bank official says the 12 billion shillings minimum capital requirement for primary dealers in the bond market will be relaxed for non-bank financial institutions to participate.
Bank of Uganda plans to introduce non-bank financial institutions through a tier system in order to allow the dealers in government security and bonds build capacity to compete with the commercial banks.
The bank believes that the inclusion of broker dealers would increase demand for debt securities by engaging individuals, non-bank financial institutions and non-financial companies.