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RBI issues rules for tri-party repo contracts

Tri-party repo is a type of repo contract where third entity as intermediary between the two parties

Abhijit Lele  |  Mumbai 


To support the growth of the corporate bond repo market, the (RBI) on Thursday issued norms for tri-party repo contracts, including Rs 25 crore as minimum for an entity to work as a Tri-party repo is a type of repo contract where a third entity (apart from the borrower and lender) called a acts as an intermediary between the two parties. The services of agents cover activities such as collateral selection, payment and settlement, custody and management during the life of the transaction. Introduction of tri-party repos will likely contribute to better liquidity in the corporate bond repo market. This will provide markets an alternate repo instrument to government securities repo, the had said in its monetary policy review on August 3. The said tri-party repo may be traded using any trading process permitted by the central bank.

Tri-party repo may be traded over-the-counter (OTC), including on electronic platforms, or stock exchanges. All trades would have to be reported within 15 minutes of the trade for public dissemination to the Clearing Corporation of India, exchanges or authorised reporting platform. All tri-party agents need a prior nod from the to act in that capacity. Scheduled commercial banks, recognised stock exchanges and clearing corporations of stock exchanges are eligible to be tri-party agents.

First Published: Fri, August 11 2017. 01:17 IST