12 April 2017
Mumbai
Reporter: Mark Dugdale

India plans introduction of triparty repo


The Reserve Bank of India has set out a framework for a triparty repo market to enable participants to use underlying collateral more efficiently and facilitate the development of the term repo market in India.

The draft framework, issued on 11 April for public comment until 5 May, proposes the introduction of triparty repo on both government and corporate bonds, and sets out rules for collateral eligibility, reporting, settlement and agents.

Eligible triparty agents must have “past experience of at least five years in the financial sector, [in] India or abroad, preferably in offering custodial services”, as well as capital of at least INR 250 million (USD 3.87 million).

The introduction of a triparty repo market will be welcome news to market participants, whose securities lending business in India remains muted.

India’s National Securities Clearing Corporation cleared 77,730 securities lending trades in 2016, generating $9.23 million in lending fees. Those trades had a notional turnover of $1.79 billion.

Martin Corrall, who is on the executive board of the Pan Asia Securities Lending Association (PASLA) and group lead of a sub-working group on India, sees foreign participation as a key concern for the market.

He said recently: “It’s expensive for foreign borrowers in India. Offshore entities are required to post cash as collateral with high interest rates and no rebate paid, which creates an unfair playing field, whereas domestic players are allowed to post securities.”

“Concern on the Securities and Exchange Board of India’s view of overseas direct investment and limited supply due in part to the securities borrowing and lending infrastructure, has led to minimal offshore activity. Market access is concentrated on single stock futures.”

More news
The latest news from Securities Lending Times
Join Our Newsletter

Sign up today and never
miss the latest news or an issue again

Subscribe now
J.P. Morgan and Citi collaborate on truePTS post-trade platform
15 December 2017 | New York | Reporter: Zsuzsa Szabo
The New-York-based startup processes ecosystem for the global $700 trillion derivatives market
SIFMA: US market requires improved CCP access
15 December 2017 | Washington DC | Reporter: Jenna Lomax
The Dodd-Frank Act has increased the need for US firms to have access to non US swaps trading venues and central counterparties, according to paper by FIA and SIFMA
France raises spectre of European financial transactions tax
15 December 2017 | Paris | Reporter: Jenna Lomax
French President Emmanuel Macron and several ministers have dismissed concerns over the negative effect of an EU financial transactions tax on securities lending revenue
Vekaria exits Credit Suisse
14 December 2017 | Dublin | Reporter: Zsuzsa Szabo
Head of Credit Suisse's Dublin branch Manish Vekaria has left the bank
Cerberus hires new managing director
14 December 2017 | New York | Reporter: Jenna Lomax
Kimmel was previously global head of prime services at Cantor Fitzgerald
SMEs to face new research costs under MIFID II
14 December 2017 | Frankfurt | Reporter: Zsuzsa Szabo
Research services for SMEs will no longer be free of charge when MiFID II comes into force on 3 January 2018
Hedge funds in sprint finish for record-breaking returns in 2017
14 December 2017 | London | Reporter: Drew Nicol
Hedge funds are on track for their best annual revenue since 2013 with average returns of 7.7 percent, according to eVestment research