The Securities and Exchange Commission (SEC) is working to establish a secondary market for government securities (GS) that involve non-banking institutions.
The securities regulator in a statement on Tuesday said it is “taking proactive steps toward the potential expansion of the repo market to include nonbank financial institutions, broadening the range of participants beyond the GS eligible dealers.”
Typically, in a central banking tool, a central bank extends financing to banks for their daily needs for cash through the buying and selling of government securities, with a corresponding promise to buy it back at a later time.
The SEC’s plan this time includes other financial institutions which have expressed interest to engage in repo transactions.
“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,” said Emilio Aquino, SEC chairman, adding this is part of the SEC’s commitment to deepening the country’s capital market.
Since assuming direct market oversight in 2020, the SEC said it has worked to stabilize repo market operations and enforce compliance among market participants.
In 2024, the SEC supported the call of industry groups for the expansion of the documentary stamp tax exemption for all derivative market players.
