DMD Circular No. 03

Date: ------------------- Date: 31 October 2024

To: Managing Director / Chief Executive Officer All Primary Dealers operating in Bangladesh.

Subject: Selection of Benchmark Government Securities and Two-Way Price Quoting.

Dear Sir,

Reference is invited to DMD Circular No. 6/2020 dated 10 November 2020 and DMD Circular Letter No. 08/2023 dated 01 November 2023 on the subject above.

2. In order to develop the government securities market and establish market-based operational procedures, instructions are hereby issued to designate 30 Treasury bonds as benchmarks, selected as 5 bonds from each of the 6 categories based on the remaining maturity (Remaining Maturity) of various maturity Treasury bonds. Additionally, the list of benchmark securities is updated via the aforementioned Circular Letter.

3. Now, in order to make the valuation of Treasury bonds consistent with market-based and internationally best practices and to build an active secondary bond market in the country, the following instructions are issued:

a) 30 bonds selected from the existing Treasury bonds in the market will be considered as benchmark securities. For each category of selected benchmark securities, Primary Dealers must provide two-way price quoting (firm quotes) on the order-matching platform within 30 minutes of office opening every working day;

b) Primary Dealers whose quarterly average holdings (provided on a quarterly basis) are up to 3% must provide two-way price quoting (firm quotes) of at least 10 million (Buy 10 million and Sell 10 million) per category, totaling at least 120 million across all 6 categories; and Primary Dealers whose quarterly average holdings exceed 3% must provide two-way price quoting (firm quotes) of at least 20 million (Buy 20 million and Sell 20 million) per category, totaling at least 240 million across all 6 categories;

c) The maximum limit of the bid-ask spread for two-way price quoting has been revised based on the spread of the quotes. In this regard, the maximum bid-ask spread for all categories of Treasury bonds designated as benchmarks shall be 0.80% (80 basis points);

d) If a Primary Dealer does not have tradable bonds in any category among the Treasury bonds selected as benchmarks in the Bank's holdings, they must ensure two-way price quoting (firm quotes) for all categories of securities by rebalancing their own portfolio or purchasing from the market by 30 November 2024;

4. In this context, DMD Circular No. 6/2020 dated 10 November 2020 and DMD Circular Letter No. 08/2023 dated 01 November 2023 are hereby cancelled.

5. These instructions shall come into force immediately.

Yours faithfully,

Attachment: As per list.

(Ismail Hossain) Director (DMD) Phone: 9530131

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Annexure

ISIN	Maturity Band	Issue Date	Maturity Date	Coupon Rate	Face Value (Cr)	Duration
BD0925011027	2	5-Jan-23	5-Jan-25	8.90%	6,000.00	0.68
BD0926251028	2	3-Mar-24	3-Mar-26	11.60%	4,055.28	1.17
BD0926461023	2	5-May-24	5-May-26	12.30%	3,835.73	1.59
BD0926061021	2	7-Jul-24	7-Jul-26	12.25%	8,280.77	1.77
BD0926141021	2	2-Sep-24	2-Sep-26	12.20%	4,926.24	1.92
BD0928261058	5	11-Mar-23	11-Mar-28	8.29%	5,200.00	3.19
BD0928101056	5	13-May-23	13-May-28	9.10%	3,789.83	3.87
BD0929401059	5	15-Jul-24	15-Jul-29	12.10%	6,141.35	4.45
BD0929431056	5	15-Sep-24	15-Sep-29	12.40%	7,760.69	4.54
BD0929151050	5	9-Sep-24	9-Sep-29	12.30%	5,497.03	4.94
BD0929221101	10	18-Nov-19	18-Nov-29	9.23%	4,000.00	5.13
BD0930261104	10	22-Mar-20	22-Mar-30	9.15%	4,000.00	5.23
BD0930381100	10	7-Sep-20	7-Sep-30	8.74%	4,500.00	5.51
BD0930431103	10	17-May-20	17-May-30	8.66%	4,500.00	5.63
BD0932111109	10	21-May-22	21-May-32	8.10%	5,445.45	7.89
BD0932231105	10	21-Nov-22	21-Nov-32	8.33%	5,500.00	8.14
BD0933071104	10	16-Jul-23	16-Jul-33	9.20%	5,415.03	8.79
BD0934311103	10	22-Nov-24	22-Nov-34	12.05%	7,124.80	9.31
BD0934401102	10	17-Jul-24	17-Jul-34	12.15%	4,208.25	9.46
BD0934481104	10	20-May-24	20-May-34	12.60%	9,000.00	9.63
BD0935391153	15	13-Sep-20	13-Sep-35	8.90%	5,227.32	10.53
BD0935441156	15	24-May-20	24-May-35	8.70%	5,316.09	10.64
BD0937821157	15	27-Jul-22	27-Jul-37	7.98%	5,266.66	12.49
BD0937901157	15	29-May-22	29-May-37	8.55%	6,654.22	12.66
BD0939371151	15	27-Sep-24	27-Sep-39	12.15%	6,257.57	14.40
BD0940401203	20	20-Sep-20	20-Sep-40	9.20%	5,029.96	15.55
BD0940441209	20	24-May-20	24-May-40	8.94%	5,184.35	15.64
BD0942901200	20	29-May-22	29-May-42	8.65%	5,161.28	17.66
BD0942241201	20	28-Nov-22	28-Nov-42	8.95%	4,943.23	18.16
BD0944051202	20	28-Jan-24	28-Jan-44	12.75%	6,374.29	19.74

Maturity Band-5 (Maturity: 5 to 8 Years)

Maturity Band-6 (Maturity: 8 to 10 Years)

Selected-A

Face Value in Crore

Maturity Band-1 (Maturity: 0 to 2 Years)

Maturity Band-2 (Maturity: 2 to 5 Years)

Maturity Band-3 (Maturity: 5 to 8 Years)

Maturity Band-4 (Maturity: 8 to 10 Years)