AMC Repo Clearing gains ground, gets Rs 160 crore in past fortnight

After a dry spell of nearly two months, AMC Repo Clearing (ARCL), which was inaugurated by Finance Minister Nirmala Sitharaman on July 28, has finally witnessed some trading activity. The limited-purpose clearing corporation is hopeful that it will gain more acceptance and plans to onboard three large corporations in the coming fortnight.

Since its launch, the response to the platform aimed at boosting liquidity in the corporate bond repo market has remained tepid. After registering trades worth Rs 480 crore on launch day, ARCL witnessed trades worth Rs 5 crore only on September 15. However, in the previous nine sessions, the platform has seen volumes totaling Rs 160 crore across eight trades.

Sources have indicated that this increased volume is due to the participation of one large bank and some mutual funds.

“We expect the volumes to pick up next week as more participants join. We are waiting for two to three large corporates to join shortly, which will provide further impetus. Additionally, mutual funds are also supporting us,” said an official.

Sources have also indicated that some primary dealers are being onboarded the platform and may start participating in the next week.

According to the norms set by the Securities and Exchange Board of India, large corporates are required to meet 25 per cent of their incremental borrowing through the debt market. However, in its latest board meeting, the regulator relaxed the norms and provisions of penalties on large corporates for any shortfalls in this threshold. Furthermore, it has narrowed down the number of large corporates who would be required to adhere to these norms. These changes are yet to be notified.

The capital for ARCL has been contributed by asset management companies (AMCs) based on their assets under management of open-ended debt-oriented schemes.

ARCL offers clearing and settlement services for all trades executed on the National Stock Exchange and BSE under tri-party repo in corporate debt securities. The platform’s services extend beyond AMCs to include insurance companies, market makers, and short-term traders looking to take positions and manage their risks in listed corporate bonds, debentures (non-convertible debt securities), commercial papers, and certificates of deposits.

It took more than two years since incorporation for ARCL to launch its services.