New auction system for Sri Lanka treasury bills
ECONOMYNEXT – Sri Lanka’s central bank said it is preparing to introduce a new auction system for treasury bills similar to a new auction it launched last year for treasury bonds.
A statement said that for bonds pre bid meetings are held regularly now, the auction calendar is announced in advance and a policy of accepting no more than the total offered amount has been adopted.
“Internal controls in relation to the issuance process have been strengthened and the operational manual has been updated,” it said.
The move is part of measures to improve central bank governance recommended by a commission inquiring into alleged rigged auctions of government bonds during 2015 and 2016.
The commission probed allegations where billions of rupees of bonds were bought by Perpetual Treasuries, a primary dealer, at high yields (low prices) and dumped mostly on the Employees’ Provident Fund, a state pension fund managed by the central bank, at low yields (high prices).
(COLOMBO, 15 Octber, 2018)