Univer, Alfa-Bank conduct first repo with govt bonds on Ukrainian Exchange with risk control through Settlement Center
Univer-Capital LLC and Alfa-Bank (Kyiv) on Thursday concluded the first deal for the Ukrainian market with government bonds for UAH 1.9 million as repo on the Ukrainian Exchange (UX) launched by the state-run Settlement Center with risk control.
"The bottom line is that the first exchange-based repo operations were carried out with risk control in anonymous mode," Taras Kozak, the founder and partner of the Univer investment group, said on Facebook, commenting on the event.
He said that repo with risk control is a money market service for performing exchange repo operations, where the Settlement Center will act as a central counterparty, control collateral for clearing members and meeting of obligations under concluded repo agreements or payment of a fine to a bona fide party.
"For the first time, banks and investment firms will be able to conduct lending operations without knowing the client who receives this money. That is, without signing an agreement with each borrower, without spending time on financial monitoring of the client, without holding credit committees, etc. It is fast, convenient, and cheap," Kozak said.
Board Chairman of the Settlement Center Oleh Tkachenko told Interfax-Ukraine that the participants must deposit collateral in the amount of 10%, which can be monetary funds in the national currency or hryvnia government bonds with maturity until 2027. According to him, the minimum volume of transactions is from UAH 1 million, the tariff of the Settlement Center is 0.2% per annum of the amount of the first part of the repo agreement.
Tkachenko added that the necessary documents have been signed with all three stock exchanges: UX, PFTS and Perspectiva, which have made the necessary changes to their rules.
He said that Navigator-Invest LLC, OTP Bank and Freedom Finance Ukraine LLC have already been admitted to repo with risk control, and 10 more participants are expected: banks Alliance, Vostok, Globus, Kredobank and Ukrgasbank, Art-Capital Custody LLC, BTS Broker, Dragon Capital, Investment Capital Ukraine and Profi-T Securities.
"There are no efficient markets without developed repo markets. This is a necessary step," the head of the Settlement Center said.
He said that within three months it is planned to expand this mechanism to foreign currency government bonds: both as collateral for the transaction, and as the object of the transaction itself, which will provide market participants with a hedging instrument.
At a round table organized by the Financial Club on Thursday, Securities Manager at Alfa-Bank Viktor Sazonenko said that the bank is listed on stock exchanges. "First of all, we will place funds. There is money, take it," he said.
Sazonenko said that it is necessary to create a single liquidity center so that there is one common center from the entire market.