Mart gets SRO license for repos market

The Securities and Exchange Commission (SEC) has given the Money Market Association of the Philippines’ (Mart) provisional license to act as the self-regulatory organization (SRO) for government securities repurchase (repo) market.

The development of repos—which allow dealers to borrow securities, ensure title transfer and quote two-way prices on government bonds—is seen pivotal to the efficient functioning of the financial markets.

“It will provide participants a platform to borrow scarce securities and hedge positions to effectively improve liquidity in the local currency bond markets and help the development of capital markets,” the SEC said in a statement.

Repos provide full ownership transfer of title to underlying securities, giving the buyer the right to reuse those assets or offset them against the amount owed to them by the seller, if the seller defaults.

So far eight banks with government securities (GS) eligible dealers license have signified intention to participate in the GS repo market during the six-month pilot period.

The SRO status gives Mart the right to formulate its own policies and police its own ranks. The provisional license granted to Mart will cover a period of six months which will allow the participants to trade in the repo market following the SRO rules.—DORIS DUMLAO-ABADILLA