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Committee to oversee repo Trust

Published:Wednesday | January 1, 2014 | 12:00 AM

A high-level steering committee has been established to provide oversight in the setting up of a Trust arrangement to mitigate the risks to securities dealers retail repurchase clients.

The Trust will hold the underlying securities on behalf of clients during the transition period for the phasing out of the retail repo business model, the Government has advised the International Monetary Fund (IMF).

The Trust will have representation from the Ministry of Finance and Planning, the Bank of Jamaica, Financial Services Commission and the Jamaica Stock Exchange, the Government has advised the IMF in its updated letter of intent, dated December 3, 2013.

The Trust will be responsible for the custody of the securities underlying retail repo transactions. It will also facilitate the taking of appropriate actions in the event of a transaction failure or default.

A key function of the Trust arrangement, the overnment said, will be to ensure that securities are allocated to retail repo clients on a one-to-one basis, and that such securities would be held apart from the dealer's estate in the event of its insolvency.

The Trust arrangement is intended to ensure that funds and securities flow in accordance with the terms of the repo agreement.