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MARKET REPO


 
Repo is a repurchase agreement entered into between eligible counterparties for borrowing and lending of funds on a collateralized basis. A repo involves selling of a security with the agreement to repurchase the same at a future date for a predetermined price. The seller of the security receives funds while the buyer of the security receives collateral for the funds he has lent. The rate at which the security will be repurchased in the second leg of the repo is derived from the rate of interest payable on the funds lent and is known as repo rate.
 
Repo transactions are permitted between counterparties and in instruments permitted by the Reserve Bank of India. At present, repoable securities include Central Government dated securities (G-Secs), Treasury Bills (T-Bills), State Development Loans (SDLs) and Corporate Bonds. Recently, RBI also permitted re-repo of securities acquired under reverse repo subject to certain restrictions. Such an arrangement is permitted only in case of dated G-Secs, T-Bills and SDLs. The entities permitted to undertake repo transactions include Scheduled Commercial Banks, Co-operative Banks, Primary Dealers, Mutual Funds, Insurance Companies and corporate entities.
 
A Reverse repo transaction is the mirror image of a repo. It involves buying of securities and lending of short term surplus in the first leg and selling the security at a predetermined rate in the second leg. A repo transaction for one counterparty becomes a reverse repo transaction for the other counterparty.
 
Repo transactions facilitate banks to invest surplus cash for adjusting CRR positions and also for adjusting SLR positions. Clearcorp Repo Order Matching System (CROMS) is an STP enabled anonymous Order Matching Platform launched by Clearcorp Dealing Systems (India) Ltd for facilitating dealing in Market Repos in all kinds of Government Securities. OTC transactions too, are permitted on this platform. The market on an average witnesses volumes in the range of Rs 25,000 – 35,000 Crs.
 
STCI PD has access to CROMS system. We borrow/lend funds/securities on electronic platform as well as in the reported segment. Clients interested in undertaking repo transactions may contact our Funding Desk on 022 66202213/232.
 
 
 

Latest News

Reserve Bank of India
Reserve Bank of India kept policy rates unchanged while changing the stance to calibrated tightening from neutral in its Fourth Bi-monthly Monetary Policy. Consequently, key policy rates remained unchanged – Repo rate at 6.50%, Reverse Repo at 6.25% and Marginal Standing Facility (MSF) at 6.75%
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Inflation projections for 2018-19
Inflation projections for 2018-19 were revised downside as food inflation has remained benign. Including the impact of HRA, inflation is projected to be at 4% in Q2 FY19 (4.6% prev), 3.9%-4.5% in H2 FY19 (4.8% prev) and 4.8% in Q1 FY20 (5% prev). The GDP projection for FY19 has been maintained at 7.4% –with 7.5% in Q2 FY19 and 7.3-7.4% for H2 FY19. GDP growth for Q1 FY20 is projected at 7.4% (7.5% prev).
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Belying market expectations
Belying market expectations, headline consumer price inflation for Sep-18 stood at 3.77% compared to Aug-18 reading of 3.69%, remaining below the RBI’s medium term inflation target of 4% for second consecutive month. Core inflation also moderated to 5.81% vs. revised estimate of 5.92% last month (5.87% previously).
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September Wholesale
September Wholesale Price Index came in at 5.13% as against 4.53% in the August mainly due to rise in prices of Fuel and power as well as Manufactured Products. At the same time, July WPI print was revised upwards to 5.27% from 5.09% previously.
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Indias September manufacturing
India's September manufacturing PMI came in at 52.2, rising from 51.7 in August due to gains in new orders, output and employment.
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