In the news: Repo round-up

ECB temporarily relaxes rules on ASBs

With effect from 16 October the European Central Bank (ECB) is imposing higher reporting standards for residential mortgage-backed securities (RMBS) and asset-backed securities (ABS).  However it has agreed to temporarily consider accepting securities which fall short of the standards on a case by case basis and subject to acceptable explanations of the reason for the standard not being reached.

The move is being seen as a way of helping to increase the flow of funds to SMEs with ABSs being packaged and used in repo arrangements with the ECB.  According to research by Bruegel at the end of March across the Eurozone there was some €145 billion in SME securities backed by loans to SMEs.

The repo effect on Turkish Lira

On September 9th Turkey’s Central Bank offered to lend 3 billion liras ($1.5 billion) at the benchmark 4.5 percent rate in its auction of one-week repurchase agreements but announced that it would not be holding its one week repo sale on September 16th as part of its financial tightening and control measures.  Speaking to Bloomberg Business Week a fund manager at Ata Invest in Istanbul said that “The biggest factor influencing the market is the central bank’s resumption of repo funding.”

If you want to learn more about the latest trends in repo you can attend a Eureka Financial Repo Market course which gives delegates a chance to explore applications of repos for risk management, speculation and arbitrage purposes with a particular emphasis on the relationship between the bond repo market and derivatives such as swaps and exchange traded bond futures.

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Eureka Financial offers over 100 public and in-house training courses in banking and finance, corporate finance and M&A, risk management, operations, investments, wealth management, soft skills and management. For more details visit: www.eurekafinancial.com

 

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