In terms of the Repurchase Transactions (Repo) (Reserve Bank) Directions, 2018 dated 24th July, 2018 "Tri-party repo" means a repo contract where a third entity (apart from the borrower and lender), called a Tri-Party Agent, acts as an intermediary between the two parties to the repo to facilitate services like collateral selection, payment and settlement, custody and management during the life of the transaction.
Triparty Repo i.e. TREPS facilitates, borrowing and lending of funds, in Triparty Repo arrangement. CCIL would be the Central Counterparty to all trades from Tri Party Repo Dealing System (TREPS) and would also perform the role and responsibilities of Triparty Repo Agent, in terms of Repurchase Transactions (Repo) (Reserve Bank) Directions, 2018 as amended from time to time.
Operational FAQs
Borrowing Limit is allowed against collateral deposit in GOI securities (including STRIPS) categorised by CCIL as liquid and semi-liquid securities up to 100% (market value net of haircut) of such collateral deposit. However, Borrowing Limit against collateral deposit in illiquid GOI securities and SDLs is capped at 20% (market value net of haircut) of the collateral deposit in liquid and semi-liquid securities (market value net of haircut). Further, no limit is allowed on collateral in illiquid GOI securities/SDLs on a stand-alone basis.
As explained above, borrowing limit against illiquid GOI securities /SDLs is allowed at 20% of the collateral deposited in liquid and semi-liquid GOI securities. The liquidity category of all the GOI securities is reviewed monthly and the changes are effected after giving 15 days’ notice. In such case, if any Liquid/semi-liquid GOI Security (ies), against which 20% borrowing limit was allowed on the collateral in illiquid GOI securities/SDLs become illiquid, the limit available against illiquid GOI securities/ SDLs would become zero. Further, if the collateral is in only Floating Rating Bonds, no borrowing limit will be available in collateral in illiquid GOI bonds/SDLs.