Selection of Dealers

Dept 20 - Debt and Financial Assets Management
Dept 20 - Debt and Financial Assets Management

Published

  • State Debt
Updated 2-1-2019

Selection of the Primary Dealer Group and Recognized Dealer Group

An applicant to become a member of the Primary Dealer group or Recognized Dealer group shall submit a written application to become a Primary Dealer or Recognized Dealer to the Ministry of Finance. The Ministry of Finance selects members of Primary Dealer group and Recognized Dealer group for annual periods, starting 1 January and ending 31 December. The selection is notified to Primary Dealers and Recognized Dealers on 30 November each year at the latest. The Ministry of Finance reserves the right to define the number of members as well as the proportion between resident and non-resident members of Primary Dealer group and Recognized Dealer group.

 

Only the following entities may become members of the Primary Dealer group or Recognized Dealer group:

  • a bank with a banking licence granted pursuant to Article 4 of Act No. 21/1992 Coll., Banking Act, as amended (hereinafter referred to as the “Banking Act”), which on the basis of this licence is authorised to provide investment services pursuant to Article 4 (2) a) to c) and e) of Act No. 256/2004 Coll., Capital Market Act (hereinafter referred to as the “Capital Market Act”),
  • a branch of foreign bank with a banking licence granted pursuant to Article 5 of the Banking Act, which on the basis of this licence is authorised to provide investment services pursuant to Article 4 (2) a) to c) and e) of the Capital Market Act,
  • a foreign entity having its registered office in another member state of the European Union, which on the basis of the single licence pursuant to Article 5c et seq. of the Banking Act is authorised to perform activities pursuant to Article 5d d) and g) of item 4 of the Banking Act on the territory of the Czech Republic,
  •  a securities dealer pursuant to Article 5 of the Capital Market Act which is authorised to provide investment services pursuant to Article 4 (2) a) to c) and e) of the Capital Market Act,
  • a foreign entity providing in accordance with Article 28 of the Capital Market Act investment services pursuant to Article 4 (2) a) to c) and e) of the Capital Market Act through its branch,
  • a foreign entity having its registered office in another member state of the European Union, which is authorised on the basis of the single licence pursuant to Articles 24 and 25 of the Capital Market Act to provide investment services pursuant to Article 4 (2) a) to c) and e) of the Capital Market Act on the territory of the Czech Republic,
  • a foreign entity having its registered office in another member state of the European Union, which is a bank, bank’s branch, securities dealer or securities dealer’s branch, and which is authorised to provide investment services pursuant to Article 4 (2) a) to c) and e) of the Capital Market Act on the territory of a member state of the European Union
  • an entity authorised by the United Kingdom Prudential Regulation Authority and regulated by the United Kingdom Financial Conduct Authority and the Prudential Regulation Authority (or any successor bodies) to perform regulated activities including at least: (i) dealing in investments as principal; (ii) dealing in investments as agent; (iii) arranging (bringing about) deals in investments; and (iv) advising on investments..

 

An applicant to become a member of the Primary Dealer group is required to fulfil the following criteria at the time of submitting the application:

  • to be a member of a group where entities act as primary or recognized dealer (or to have a similar function) for at least three other European Union member states at the same time (applicable to non-resident institutions),
  • to have high level of management and depth and experience, dealing capability as well as proven geographic and institutional distribution capacity,
  • in the 6 months period preceding to the submission of the application it has participated, through one or more members of Primary Dealer group, in auctions and has subscribed for at least 3 % of the total face value of Czech Government Bonds allocated in this period by the Ministry of Finance,
  • to be an active DETS participant, i.e. to comply with the quoting obligations, for a period of 6 months at least preceding to the submission of the application and to have a past record of active secondary trading of the Czech Government Bonds,
  • to prove a record of support of the Czech Government Securities market and promotion of the Czech Government Securities by adequate analysis, research and publications,
  • in the opinion of the Ministry of Finance, shall maintain sufficient resources in terms of human resources, financial situation and such organization of its syndicate desk, trading and sales forces to support efficient primary and secondary market of Czech Government Securities,
  • in the opinion of the Ministry of Finance, shall maintain the highest standards in financial business practice, consistent with the Ministry of Finance’s objective of achieving orderly, efficient and liquid Czech Government Securities market.

 

An applicant to become a member of the Recognized Dealer group is required to fulfil the following criteria at the time of submitting the application:

  • to be a member of a group where entities act as primary or recognized dealer (or to have a similar function) for at least three other European Union member states at the same time (applicable to non-resident institutions),
  • to have high level of management and depth and experience, dealing capability as well as proven geographic and institutional distribution capacity,
  • to be an active DETS participant, i.e. to comply with the quoting obligations, for a period of 6 months at least preceding to the submission of the application and to have a past record of active secondary trading of the Czech Government Bonds,
  • to prove a record of support of the Czech Government Securities market and promotion of the Czech Government Securities by adequate analysis, research and publications,
  • in the opinion of the Ministry of Finance, shall maintain sufficient resources in terms of human resources, financial situation and such organization of its syndicate desk, trading and sales forces to support efficient primary and secondary market of Czech Government Securities,
  • in the opinion of the Ministry of Finance, shall maintain the highest standards in financial business practice, consistent with the Ministry of Finance’s objective of achieving orderly, efficient and liquid Czech Government Securities market.

 

The Primary Dealers and Recognized Dealers are selected by the Ministry of Finance from the present Primary Dealer group, Recognized Dealer group and from other institutions the Ministry of Finance might decide to consider. The Ministry of Finance is also entitled to replace any of the existing Primary Dealers and Recognized Dealers who might resign.