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. It is also known as TREPS.
The aim to introduce Tri-party repo was to improve liquidity in the corporate bond repo market, thereby providing an alternate to Government securities repo. Tri-party repos are transacted as per the terms of Tri-party repo (Reserve Bank) Directions, 2018 (Amendment dated November 28, 2019), or such other directions issued by the Reserve Bank of India (RBI) from time to time.
The Clearing Corporation of India Limited (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.
All the repo eligible entities are entitled to participate in Triparty Repo. The entity type admitted include, Public Sector Banks, Private Banks, Foreign Banks, Co-operative Banks, Financial Institutions, Insurance Companies, Mutual Funds, Primary Dealers, Bank cum Primary Dealers, NBFCs, Corporates, Provident/ Pension Funds, Payment Banks, Small Finance Banks, etc.
Repo rate or REPurchase Options rate is the rate at which commercial banks and financial institutions borrow money from the RBI for a short term, usually less than a year.
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