The updated Guide, adopted with the approval of the IRC Committee, sets out standards for the orderly trading and settlement of repos. The Guide also codifies market conventions, usually in response to queries from market participants.
The purpose of the Guide is to help foster a smooth and orderly market in repo in Europe by recommending practices which market experience suggests can help avoid uncertainties or disagreements about transactions, and consequent delays or disruption to repo trading and settlement.
The practices set out in the Guide are general recommendations only. Parties to repos are free to agree other terms, where they see fit. It is not necessarily a problem if recommended best practice is not followed, provided parties recognise the risks to which they may expose themselves as a result. The Guide has been written to assist staff in member firms of the ERC, but other firms may find the Guide helpful. It presupposes some knowledge and experience of how the repo market operates.
This Guide supersedes the repo trading practice guidelines published on behalf of the ERC over a decade ago. This was its first initiative to comprehensively explain best practices and conventions for the European repo market. A separate ERC guideline, updated in 2012, elaborated best practices and conventions for repo margining. Complementing these guidelines, other repo documentation published by the ICMA has included a codification of floating-rate repo conventions; a recommendation on repo matching as a driver for risk reduction; and a recommendation regarding fails in negative interest rate repos. This Guide pulls together and updates these previous ICMA publications. As the market develops, the Guide will continue to be updated.
Full Guide
FAQ document on Repo
Full press release
© ICMA
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article