Another bid to boost corporate bond market
AMC Repo Clearing, the tri-party repo company the Finance Ministry launched in July, has waived transaction charges for three months and is set to increase the size of orders on its platform as it looks to draw in more participants in India's relatively shallow corporate bond market.
«They (the AMC Repo) have waived the transaction charges for three months starting from December 11 for tri-party repos in corporate debt securities and there is a plan to increase the size of orders from ₹50 crore at present to ₹200 crore going ahead,» a source aware of the developments said.
«By increasing the order size it brings down operational costs because an entity which wishes to execute a deal worth ₹200 crore for example will not have to pay multiple transaction costs,» the source said.
AMC Repo's officials did not comment on the matter.
Finance Minister Nirmala Sitharaman had on July 28 launched the Tri-party Repo in corporate bonds offered by the AMC Repo, which is focused on establishing a market for short-term borrowing against corporate debt. The operationalisation of the firm is a step towards the government's long-standing aim of deepening the corporate bond market.
A tri-party repo is a type of contract that includes a third party which acts as an intermediary between two entities looking to lend and borrow funds through a repo operation.
The third party takes care of payment and settlement, selection of collateral and custody during the length of the transaction. A vibrant repo market could provide corporates with access to quick lending and borrowing facilities.
The latest steps taken by the AMC Repo Limited are aimed at pushing costs down closer to the charges that exist on the Clearing Corporation of India's
