The Bank of Ghana has announced that the trading of Repos in Ghana will go online from October 1, 2020, allowing trades to be executed in real time, using a framework provided by the Global Master Re-purchase Agreement (GMRA) a globally recognized legal document.This follows the launch of the Guidelines for Re-purchase Agreements in Ghana, which is in line with Section 134 (5) of the Bank and Specialised Deposit Taking Institutions Act (Act 930).
According to a statement issued by the BoG, all participating banks have been directed to execute a GMRA with each other by September 15, 2020. This will take place prior to the October 1,2020, scheduled commencement of live trading scheduled.
“Repo counterparties may use the appropriate systems to facilitate their conduct of GMRA – based Repos. The buyer of a Repo Security shall mark-to-market using Bloomberg as a pricing source. Where Bloomberg does not price a Repo Security, the buyer and seller shall agree a price for this purpose,” the Bank said.
Real time trading in repos between banks will significantly improve the capacity of a bank facing short term liquidity challenges to ride through them without any inconveniences for its customers, as such a bank would simply issue repos for cash to other banks over a short, agreed tenor.
In the anticipation of the loss of value of the collateral security that may be experienced if it is liquidated following an event of default by a counterparty, the buyer shall apply an extra margin at the initiation of the Repo transaction which would serve as compensation.
Copied from: Ghana web
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