Leading stock exchange NSE today said it has received approval from the Reserve Bank and market regulator Sebi to launch repo (or repurchase) in corporate debt securities.
Rival bourse BSE earlier this week had received similar approval from the regulators to introduce repo in corporate debt securities and it 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 circular issued today, NSE said it has "received approvals from the Reserve Bank of India (RBI) and Securities and Exchange Board of India (Sebi) to act as tri-party agent and offer tri-party repo on eligible corporate debt securities."
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