Asia’s developing repo markets spark collateral questions

Author: Ashley Lee | Published: 12 Nov 2014

Repo markets in Asia are growing and new banking regulations mean that it’s more expensive for banks to hold assets on their own books. But collateral in the region must be permitted to move across borders.

While dealers in other jurisdictions may complain about a shortage of collateral, the market remains relatively simple in Asia: it’s predominantly cash.

That will change as the markets mature and capital becomes more expensive following the full implementation of global regulations such as Basel III. Asian dealers and banks must be prepared.

Cash is cheap right now, it’s easy, it’s fungible, it’s easily transferable and there is no shortage, said Nico Torchetti, head of post-trade services at the Singapore Exchange, speaking at the Asia Securities Industry...