A repo is a sale of a quantity of an asset and a simultaneous agreement to repurchase the same quantity of an equivalent asset at a future date or on demand for the original value plus a return on the use of cash.
ELIGIBLE COUNTERPARTIES
BOG
Banks and SDIs
Securities Dealers
Corporates with knowledge and sophistication to appreciate the risk of repo market
HNWI with knowledge and sophistication to appreciate the risk of repo market
ELIGIBLE SECURITIES
Treasury bills and notes issued by the Government of Ghana
Bonds issued or guaranteed by the Government of Ghana
Bank of Ghana bills
Eurobonds issued by the Government of Ghana
Corporate Bonds listed on the Ghana Fixed Income Market
These Guidelines have been prepared by the Bank of Ghana (the “BoG”), in collaboration with the Repo Stakeholder Committee. At the start of 2018, following a Regulators’ Round-table discussion on repo and GMRA enforceability, the Bank of Ghana (BoG) and the wider GFIM Committee, embarked on an effort to address GMRA enforceability.
The result – Ghana Repo Market Guidelines
It contains directives and recommended best practices for market participants who intend to trade repos in Ghana. The guideline which is being launched today endorses the Global Master Repurchase Agreement as the industry standard agreement for repo transactions in Ghana.
There has been a soft launch of these Guidelines at Washington DC, at the sides of the 2019 Annual IMF/ Worldbank meetings on October 17, 2019.
This hard launch today is necessary to get the major participants aware of the guidelines.
The launch of Guidelines for Repurchase Agreements in Ghana marks a great milestone in efforts to improve the Financial Market landscape. The launch of these guidelines will give investors the necessary confidence and clarity to operate in our money markets.
Currently the repo market is dominated by Bank of Ghana and the commercial banks. Under the new framework and with the launch of the Guidelines, the eligible counterparties and securities have been expanded. There is also absolute transfer of title to the buyer of the securities.
Repo plays an important role in the financial market. Repos are a good source for secured financing for banks and financial institutions, and a key tool for the implementation of monetary policy, repos also offer a low-risk and liquid investment for cash, as well as the efficient management of liquidity and collateral by financial firms and can be used to hedge or modify the risk profile of portfolios
A regulated and improved repo market with documented Guidelines will provide market players with the much needed liquidity to temporarily convert assets into cash to meet their financing needs.
A well regulated market will improve liquidity in the secondary market for Government of Ghana securities and consequently reduce the cost of funds.
The absolute transfer of title in the Guidelines (as enshrined in GMRA 2011) reduces credit risk of repo transactions and also contribute to reduction in cost of funds.
