Primary dealers are AFT’s close counterparties for all of its market operations. They advise and assist AFT with its issuance policy and debt management, and more generally, with any matter concerning the smooth operation of markets.
They are selected every three years by a committee made up of leading figures, including members of Parliament. The Minister of Finance has the final say in their selection. The members of the primary dealers’ group have changed over time. There were 13 members in January 1987 and, since then, the group has expanded considerably to represent the diversity of institutions active on the market for French government debt, including major retail banks, specialised institutions, and French and foreign institutions.
On 1 March 2017, the primary dealer group was comprised of 16 institutions (four French, six European, five North American and one Japanese institutions):
Bank of America - Merrill Lynch, Barclays, BNP Paribas, Crédit Agricole - CIB, Citigroup, Commerzbank, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan, Morgan Stanley, Natixis, Nomura, Royal Bank of Scotland plc (operating under the name of NatWest Markets), Société Générale, UBS.
It is the primary dealers’ responsibility to participate in auctions, place Treasury securities and ensure the liquidity of the secondary market.
Agence France Trésor deals with them as necessary for them to perform their duties:
- overseeing the proper functioning of primary issues;
- ensuring the liquidity of the secondary market in French Treasury securities and upholding their status as one of the euro area’s most liquid securities;
- promoting the market for Treasury securities;
- providing permanent and highly pertinent advice to AFT on issuance policy, debt management, promoting the State’s creditworthiness, hedging the State’s financial risks and the workings of the fixed income markets.
These responsibilities are set out in a charter signed by the primary dealers and which they undertake to comply with. They also undertake to act ethically and comply with best marketplace practices when carrying out their transactions.