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NSE launches platform to facilitate repo in corporate debt securities

Press Trust of India  |  New Delhi 

Leading stock exchange NSE today launched 'Tri-Party Repo Market' platform in its debt segment to facilitate repurchase (repo) of corporate debt securities.

The platform is a kind of repo contract where a third entity, apart from the borrower and lender, called tri-party agent acts as an intermediary to facilitate services like collateral selection, and settlement, custody and management during the life of the transaction.

At the launch of the platform, NSE MD & said: "The corporate bond market in needs improved liquidity because a holder of a corporate bond typically ends up holding the to maturity."

Repo on corporate debt provides opportunity to borrow against the securities and provides short-term liquidity to participants, Limaye said.

Availability of tri-party repo can increase demand for corporate bonds and may provide a boost to much needed liquidity in the corporate bond market, he said.

Last month, BSE had received approval from the (RBI) and the to launch repo in corporate debt securities.

Under corporate bond repo a firm or a with another company or lender to garner funds. The entity, who makes pledges, agrees to repurchase the bonds at a specified price.

and are the first few members who have participated on the tri-party repo market platform.

In a statement, (NSE) said that initially it will offer basket repo for 1 day to 7 days.

The basket repos would facilitate borrowing and lending of funds against various baskets of corporate debt securities and the baskets would include corporate bonds, certificate of deposits and commercial papers.

"Participants will be able to provide securities forming part of the basket as collateral towards repo," the exchange said.

NSE would act as tri-party agent and offer an based, anonymous, order matching and multilateral trading platform to facilitate repo transactions and would also avail the services of National Securities Corporation Ltd (NSCCL) for performing including collateral valuation, margining, and

"of repo transactions shall be guaranteed by NSCCL. This eliminates counter party risk, and would results in higher and wider participation in the corporate bond market," NSE said.

The tri-party repo market platform is available to entities permitted by the RBI and who are members of NSE's debt segment.

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

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, June 12 2018. 16:35 IST