New monthly public auction system for Treasury bonds soon
View(s):The CB is also planning an overhaul of regulatory and supervisory system with rules and principles to promote market discipline, as part of measures to improve transparency in the Government securities market.
A media release from the CB this week said it had mandated primary dealers and licensed banks to use the Bloomberg electronic bond trading platform to trade repurchase transactions (repos) in government securities.
This means dealers are required to quote and trade repos between them in the trading platform, and report in the trading platform repos carried out over-the-counter with investors, each of Rs. 100 million or above within 30 minutes of the completion of each repo transaction.
“Accordingly, the system testing and monitoring have now been completed. The CB will release the daily summary trade information of repo volumes and yield rates based on standardised tenures such as overnight, one week and two weeks shortly for the information of the market participants,” the release said.
This is the third stage of Bloomberg trading platform designed for trade of government securities in Sri Lanka. This trading platform first commenced on August 1, 2016 for outright trade of government securities of Rs. 50 million or above carried out through primary dealers which was extended to licensed banks with effect from September 15, 2016.
“Accordingly, such outright trades reported up to March 31, 2017 amount to Rs. 1,128 billion of 6,763 transactions,” the release said adding that the transparency brought to the market will improve the price discovery and increase the market liquidity and outreach which will reduce the cost of borrowing in the medium term.