Non-banks eye EGBs as primary dealers retreat
Primary dealers warn of further exits as principal trading firms wait in the wings
Europe’s debt management offices (DMOs) have a problem. Primary dealers, which guarantee secondary market liquidity in European government bonds (EGBs) in exchange for the privilege of trading directly with DMOs, are abandoning their posts.
At least seven big banks in the past 18 months alone have decided they will no longer commit scarce capital reserves to warehousing the public debt of certain European countries – and others could follow suit when the European Union’s new trading rules take
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