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SBV holds Workshop on Repo
The State Bank of Vietnam (SBV) in coordination with the Asian Development Bank (ADB) held a Workshop on Repo in Hanoi on May 25. This workshop is under the framework of the “Capital market development assistance and financial capacity enhancement” Project funded by ADB. It was attended by representatives of several SBV departments and the Vietnam Bond Forum, and specialists of the ADB.
The Workshop aims at defining the necessary scope of reforming repo transactions in the SBV open market operations (OMOs) and repo transactions between individuals and their counterparts; discussing how to formulate a Master Repo Agreement (MRA), MRA form, the ways of MRA introduction and implementation; and creating consensus on the way to develop repo markets in Vietnam.
Mr.Alan Taylor, a money market specialist of the ADB, made a presentation on basic issues of repo operation, its mechanism, repo operations in Vietnam; and repo experiences in other markets; MRA functions and its importance; the feasibility of MRA application in Vietnam and the key items for MRA.
He said that repo is an agreement to sell a security at an agreed price and to buy back the same security for an agreed price at an agreed future date. An efficient repo market brings about many benefits such as improving liquidity in secondary markets; allowing market players to position and take the advantage of yield curve arbitrage opportunities; being a tool for development of the government bond market and a monetary tool for central banks to manage liquidity, and so on.
In Vietnam, an important part of the SBV OMOs is implemented through bilateral repo transaction with commercial banks. He stated that the SBV needs to play the leading role in monitoring the repo market, thereby developing a master repo contract in line with international standards.
The Workshop ended with many questions raised by attendants, and experiences of the specialist about money market in general and repo operations in particular. The Workshop is an opportunity for the SBV to formulate a repo market in Vietnam.
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