3 weeks ago
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Richmond Mercurio - The Philippine Star
February 26, 2025 | 12:00am
The SEC said that it is taking proactive steps toward the potential expansion of the repo market to include nonbank financial institutions.
Businessworld / File
MANILA, Philippines — The Securities and Exchange Commission (SEC) is pushing to expand the government securities repurchase agreement (repo) market in line with its efforts to deepen the country’s capital market.
The SEC said that it is taking proactive steps toward the potential expansion of the repo market to include nonbank financial institutions.
The commission said the move to broaden the range of participants beyond the government securities eligible dealers is in line with recent market developments and the renewed interest among financial institutions to engage in repo transactions.
According to SEC chair Emilio Aquino, the repo market is envisioned to support the market-making activities of government securities dealers in the country.
“Expanding this market provides us with another opportunity to improve liquidity, manage short-term funding and boost overall market activity,” Aquino said.
Since assuming direct market oversight in 2020, the commission said that it has worked to stabilize repo market operations and enforce compliance among market participants.
The SEC last year supported the call of industry groups for the expansion of the documentary stamp tax exemption for all derivative market players.
The commission said that this has resulted in the issuance of a memorandum circular, which governed the tax treatment of government securities repo transactions under the Global Master Repurchase Agreement (GMRA) and allowed for the initial introduction of a functioning repo market in the country.
In collaboration with the Bankers Association of the Philippines and the Asian Development Bank, the SEC also organized a GMRA-based repo workshop earlier this month.
The SEC said that the workshop serves as a vital first step to the success of the proposed expansion by equipping stakeholders with the necessary knowledge and tools to implement the GMRA framework effectively.
The commission is optimistic that the capacity-building initiative will facilitate the signing of GMRAs among current and prospective repo market participants.
To complement all its efforts, the SEC said that it is also working on identifying the most appropriate self-regulatory organization for the Philippine Repo Market to ensure its long-term viability.
