1. Repo Markets : Background Note
- Author
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World Bank
- Subjects
REPO TRANSACTION ,RETAIL INVESTORS ,TAX PROVISIONS ,RESERVE REQUIREMENTS ,EMERGING MARKET COUNTRIES ,INVESTMENT ,GLOBAL MARKET ,BOND DEFAULTS ,SALE OF SECURITIES ,DEPOSIT ,COLLATERAL RISK ,LIQUIDATION ,EMERGING MARKET ,MONEY MARKETS ,SECURITIES DEALER ,EQUITIES ,MARKET PRACTICES ,REPO RATE ,FEDERAL RESERVE ,SECONDARY MARKET LIQUIDITY ,LEGAL TRADITIONS ,STOCK ,REPO AGREEMENTS ,INVESTORS ,COLLATERAL ,COUPONS ,MARK-TO-MARKET ,BONDS ,TRANSACTIONS ,MARKET ENVIRONMENT ,RISK FACTORS ,CREDIT LINES ,DEBT MANAGEMENT AGENCY ,BROKER ,REPO TRANSACTIONS ,INTERESTS ,TRANSPARENCY ,EMERGING MARKETS ,REPO ,FINANCIAL MARKETS ,STATUTORY LAW ,INSTITUTIONAL INVESTORS ,HOLDING ,BORROWERS ,LEGAL TRANSACTIONS ,DEPOSITS ,USE OF REPO ,MARKETS ,CREDITORS ,BID ,PROPERTY RIGHTS ,DOMESTIC MARKETS ,FIXED INCOME ,SWAPS ,SETTLEMENT SERVICES ,OVERNIGHT REPOS ,SWAP ,MONETARY POLICY ,LIQUIDITY ,INTEREST RATES ,CREDIT RISK ,CUSTODY ARRANGEMENTS ,CASH MANAGEMENT ,MARKET ,PROPERTY ,FIXED INCOME MARKETS ,CENTRAL DEPOSITORY ,SECURITIES EXCHANGE ,LOCAL MARKET ,LIQUIDITY RISKS ,USE OF REPOS ,EFFICIENT MARKET ,MARKET PRICES ,COLLATERALIZATION ,DEPOSITORY INSTITUTION ,MUTUAL FUND ,MARKET COUNTRIES ,PORTFOLIO ,CREDIT RISK EXPOSURES ,BANKRUPTCY ,LEGAL SYSTEM ,LENDER ,SECURITY ,MARKET PARTICIPANTS ,DERIVATIVES ,CAPITAL MARKETS ,REPOS ,CREDITWORTHINESS ,SECURITIES MARKETS ,CONTRACT LAW ,RISK EXPOSURES ,SECONDARY MARKET ,MARKET PARTICIPANT ,LIABILITY ,GOOD ,REPO AGREEMENT ,BOND MARKET ,CURRENCY ,BOND ,GOVERNMENT SECURITIES ,ASSET MANAGERS ,EQUITY MARKET ,BANKRUPTCY COURT ,LOAN ,MARKET PLAYERS ,MUTUAL FUNDS ,REINVESTMENT ,FINANCIAL DEVELOPMENT ,SECURITIES ,MATURITY ,FUTURE ,LIQUID ASSET ,BUY BACK ,LIABILITY MANAGEMENT ,CENTRAL BANKS ,CONTRACTS ,INVESTOR ,MARKET INFRASTRUCTURE ,COUPON PAYMENT ,TRADING ,GOVERNMENT DEBT MARKET ,LEGAL ENVIRONMENT ,T-BILL ,LIQUIDITY RISK ,GOVERNMENT BOND MARKET ,CENTRAL DEPOSITORIES ,LOCAL CURRENCY ,SECONDARY MARKET ACTIVITY ,GOVERNMENT DEBT MARKETS ,RISK EXPOSURE ,TRANSACTION ,GOVERNMENT PAPER ,VALUATION ,TAX ,INVENTORY ,GOVERNMENT DEBT ,CASH BALANCES ,CUSTODY ,SOVEREIGN ISSUERS ,DEBT INSTRUMENT ,OPEN MARKET ,MATURITIES ,CREDITOR ,DOMESTIC MARKET ,SECURITIES HOLDINGS ,LENDING ,BANK PAYMENT ,INSTRUMENT ,BANK INVESTORS ,MARKET PRACTITIONERS ,FIXED INCOME MARKET ,SECURITY INTEREST ,DEBT MARKET ,GOVERNMENT BONDS ,PLEDGES ,MARKET LIQUIDITY ,LOANS ,DIRTY PRICE ,SETTLEMENT ,RISK MANAGEMENT ,CHECK ,FACE AMOUNT ,PAYMENT SYSTEM ,BOOK-ENTRY ,EXCHANGES ,INVENTORIES ,BORROWER ,PRIMARY DEALERS ,MARKET STRUCTURE ,FINANCE ,DEBT MARKETS ,INTERNATIONAL MARKETS ,INTERNATIONAL BOND ,STOCK EXCHANGE ,COMMON LAW ,MARKET VALUE ,DEBT INSTRUMENTS ,DEFAULTS ,ACCEPTABLE COLLATERAL ,T-BILLS ,INSTRUMENTS ,INTEREST RATE RISK ,DEBT ,INDIVIDUAL CREDITORS ,CREDIT LINE ,BOND MARKETS ,MARKET TRANSPARENCY ,SETTLEMENT SYSTEM ,BANKRUPTCY PROCEDURES ,TREASURIES ,CAPITAL ADEQUACY ,CENTRAL BANK ,RETURN ,CLEAN PRICE ,MARKET DISCIPLINE ,COUPON ,NATIONAL BANK ,JUDICIAL SALE ,REPO MARKET ,PRIMARY MARKET ,BANKRUPTCY COURTS ,CAPITAL MARKET ,CDS ,REINVESTMENT RATE ,RETAIL INVESTOR ,TREASURY SECURITIES ,COUPON PAYMENTS ,EXCHANGE ,ACCOUNTING ,PORTFOLIOS ,DEPOSIT ACCOUNTS ,VALUATIONS ,MARKET DEVELOPMENT ,DEBT MARKET DEVELOPMENT ,LOCAL MARKETS ,ARBITRAGE ,LOAN MARKET ,RESERVE ,PRIVATE INVESTORS ,TURNOVER ,HOLDINGS ,EQUITY ,TREASURY ,RISK CONTROL ,GOVERNMENT BOND ,MARKET CONDITIONS ,MARKET PRICE ,PRICE VOLATILITY ,DEFAULT ,DEBT MANAGEMENT ,MONEY MARKET ,SECURITY INTERESTS ,REPO MARKETS ,REPO RATES ,CONTRACT ,MARKET PRACTICE ,MARKET RISK ,INTEREST ,FINANCIAL COLLATERAL ,LEGAL FRAMEWORK ,CASH FLOWS ,CIVIL CODE ,OVERNIGHT REPO ,INTERNATIONAL BOND MARKET ,CIVIL LAW ,SHARE ,INTEREST RATE ,FOREIGN CURRENCY ,BANKRUPTCY LAW ,YIELD CURVE - Abstract
Repo markets are an essential component of liquid Government debt markets, acting as a transmission belt between money and debt markets, as well as serving to conduct key functions for the efficient operation of debt markets. These include, among others, credit risk management, funding debt portfolios, playing the yield curve, and covering short positions and settlement fails. The hybrid nature of a repo between a collateralized loan and a full transfer of ownership makes it a very versatile instrument for a broad range of market participants with very different business models. However, this is at the same time the reason for its complexity. This note addresses the legal, structural, accounting, tax, regulatory and infrastructure factors that are decisive for repo market development. The legal and infrastructure factors that underpin repo markets functionality are evolving ones and may be different depending on the country. The perspective adopted in this note intends to provide a balanced account of both the conceptual issues in each topic and relevant country cases, with the objective of providing policy makers with analytical tools to address their country specific context.
- Published
- 2010