XN000022-1990-05-31 — Page 7

THURSDAY, MAY 31, 1990

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'IT IS ALREADY CLEAR THAT OUR PRINCIPAL

A

CREATING MANAGEMENT,

FULLY

OBJECT, THAT OF MONETARY

MONEY MARKET INSTRUMENT TO ASSIST IN EFFECTIVE IS BEING ACHIEVED, HE SAID.

"

ALL BILLS AVAILABLE FOR TENDER IN THE FIRST 12 ISSUES WERE ALLOTTED EXCEPT IN THE CASE OF THE NINTH ISSUE WHERE THE GOVERNMENT DECIDED TO WITHHOLD PART OF THEM DESPITE SUBSTANTIAL OVER- SUBSCRIPTION, MR NENDICK SAID.

HAVE

AS THE GOVERNMENT CONSIDERED THE YIELD ON THAT OCCASION WOULD BEEN TOO EXPENSIVE, PARTICULARLY IN VIEW OF THE TAX FREE STATUS OF THE BILLS AND THE LIQUIDITY THAT THE BILLS OFFERED, IT DECIDED WITHHOLD PART OF THE ISSUE, HE SAID.

ΤΟ

MR NENDICK BILLS

REGARDING THE MARKET MAKERS' RESPONSE AT TENDERS, DESCRIBED IT AS ENCOURAGING, ADDING THAT OF THE $3.5 BILLION OF SO FAR OFFERED, AROUND 69 PER CENT HAD BEEN ALLOTTED TO THEM.

THE MARKET MAKERS HAD ALSO BEEN SUPPORTIVE IN THE SECONDARY MARKET, MR NENDICK SAID.

TURNOVER IN THE SECONDARY MARKET IN MAY HAD BEEN MUCH HIGHER WITH $95 THAN APRIL, AVERAGING ABOUT $500 MILLION PER DAY, COMPARED MILLION PER DAY IN APRIL, HE POINTED OUT.

ΤΟ

THE INCREASE IN SECONDARY MARKET ACTIVITIES WAS PARTLY DUE THE IMPLEMENTATION OF THE REQUIREMENT FOR A MARKET MAKER TO QUOTE BOTH

FOR BID

THE AND OFFER YIELDS; ALLOWING A MAXIMUM OF 10 BASIS POINTS SPREAD BETWEEN THE BID AND OFFERED YIELDS AND PERMITTING A MARKET MAKER TO RUN SHORT POSITIONS AS LONG AS ITS NET POSITION IN ALL ISSUES WAS NOT SHORT, MR NENDICK SAID.

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WE TH

THE ASSISTANCE OF THE MARKET COMMITTEE, WE HAVE BEEN CONDUCTING A REVIEW OF MARKET DEVELOPMENTS SINCE BILLS WERE FIRST ISSUED

SOME MODIFICATIONS WILL BE INTRODUCED AT THE END AND

THE

INITIAL 13 WEEK PROGRAMME.

OF

+

THE

WHILE THERE IS NO IMMEDIATE INTENTION OF MAKING ANY CHANGE IN AMOUNT OF 91-DAY BILLS, WHICH WILL BE OFFERED AT WEEKLY TENDERS, THIS WILL BE KEPT UNDER REVIEW AND THE AMOUNTS MAY BE INCREASED CIRCUMSTANCE SO WARRANT.

IF

T

AS MONEY

BE

IN ORDER TO ENHANCE THE EFFECTIVENESS OF THE BILLS MARKET INSTRUMENTS, BILLS OF OTHER MATURITIES UP TO 12 MONTHS MAY ISSUED ADDITIONALLY FROM TIME TO TIME, HE SAID.

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