By default, ntpd will not use the local clock as a reference timesource - it sets the stratum to 16, which means 'unsynchronized'. This stratum number is communicated to any NTP clients that attempt to synchronize with ntpd.
To get around this, you can use the 'fudge' keyword in /etc/ntp.conf on the NTP server, to manually set the stratum of the local clock to a stratum of 0-15, e.g.:
fudge 127.0.0.1 stratum 10