The Bureau of the Treasury’s (BTr) revised rules for the primary government securities eligible dealers (GSEDs) or so-called “market makers” will be implemented in the first quarter next year.

Deputy Treasurer Eduardo Mendiola said two BTr circulars were amended but they would probably come out with only one circular revising the GSED rules this month.

Finance Secretary Margarito B. Teves has already annotated the revised rules for implementation. The next move is for the BTr to work with the Philippine Dealing and Exchange Corp. (PDEx) and other agencies concerned to ensure that there are common guidelines for the market makers.

“The circular is not purging but it’s about classifying GSEDs into market makers and ordinary dealers,” Mendiola said. The new rule will also create a new breed of security brokers for retail and secondary trade.

“Market makers will always be in the market that’s their job and they have obligations. So we have to support them especially when times are bad and interest rates are on the high side,” he explained. Rather than call this “support” as incentives, treasury officials prefer to call it “market-makers” perks’.
Primary GSEDs or the market makers will receive BTr support by way of lending cash and lending government securities.

Mendiola said the new circular re-classifying GSEDs will help the financial market become more dependable. “It would ensure that the domestic market will continue to be liquid so it would become stable.” He added that the main objective is that trading will continue and it will not be interrupted.

The BTr qualify the GSEDs as primary dealers based on volume of their awards. But some GSEDs participation in the market are mere volumes and not “real”. Presently there are only 10 active GSEDs out of 41. And of the 41 GSEDs, 35 are banks and six are non-banks.