ICMA’s European Repo and Collateral Council (ERCC) is publishing revisions to its Guide to Best Practice in the European Repo Market (Guide). Written on the basis of detailed input from experienced, current market practitioners, the Guide’s purpose is to help foster a fair and efficient European repo market by recommending practices which market experience suggests can help avoid uncertainty or disagreement about transactions and consequent delay or disruption to repo trading and settlement. With the same purpose in mind, the Guide also codifies market conventions, where this has been thought to be helpful, usually in response to queries from market participants.
Whilst tidying up some further minor details, this latest version of the Guide also introduces some elements of new, extended and refined best practice guidance. Examples include elements of best practice in notifying the termination of open repos; agreeing interest rates for late payments, including in the case of negative rate repos; confirming transactions and instructing settlement; valuing collateral; and making margin calls. In addition, this latest version includes a new annex which outlines what open, evergreen and extendible repos are. The Guide will continue to be refreshed as market practice evolves and responsive to applicable questions or comments. It is clearly understood that the practices set out in the Guide are general recommendations only and, as such, parties to repos are free to agree other terms, where they see fit. Nevertheless, the ICMA ERCC hopes that all market participants will strive towards the best practices elaborated in the Guide, or at the very least benefit from better appreciating the need to carefully manage the risks in transacting repos.
The revised ICMA ERCC Guide to Best Practice in the European Repo Market can be accessed here.