BSE to launch 'repo' in corporate debt securities on May 28

Leading stock exchange BSE today said it has received approval from Reserve Bank and Sebi to launch repo (or repurchase) in corporate debt securities, and plans to commence trading and reporting from Monday.

In market parlance, corporate bond repo is where a firm or a bank pledges corporate bonds with another company or lender to garner funds. The entity, who makes pledges, agrees to repurchase the bonds at a specified price.

The decision has been taken to deepen the corporate bond markets.

In a statement, BSE said it "has received approval from the Reserve Bank of India (RBI) and Securities Exchange Board of India (Sebi) to launch repo in corporate debt securities and plans to commence trading and reporting from May 28".

The corporate repo debt will be launched in two models -- basket repo with settlement guarantee and special repo without settlement guarantee.

Initially, the exchange will allow more than 3,500 corporate bonds and certificate of deposits for repo.

BSE is the preferred exchange for the retail trading in corporate bonds with market share of 57 per cent for 2017-18.

The membership for tri-party repo would be available under New Debt Segment (NDS) of the exchange and the members would be allowed to trade and report repo on the bourse.

In August last year, RBI had issued tri-party repo directions allowing recognised stock exchanges and clearing corporations to act as tri-party agent.