Bank Negara Malaysia updates repo policies, extends tenors to five years

This Policy Document sets out the revised requirements and expectations of the Bank on market participants (licensed banks and licensed investment banks) which enter into Repo transactions involving Ringgit and non-Ringgit repo and reverse Repo transactions including any outright sale or purchase of Repo securities with an intention to repurchase or resell these Repo securities at a future date.

Revisions to the policy document comprise primarily:

1. Extension of the maximum tenor of a Repo to 5 years from 365 days previously;
2. Expansion of eligible securities (excluding equities and loans) to accord flexibility to market participants in their conduct of Repo transactions;
3. Removal of subjection to Malaysian Annexe and fall back on general recommended documentation principle, i.e. GMRA or supplementary confirmation; and
4. Focus on principle-based risk management approach in handling of the Repo product

The policy document is available at http://www.bnm.gov.my/index.php?ch=57&pg=137&ac=860&bb=file