02 Jun Ketentuan Repurchase Agreement
Repurchase agreements, or repo agreements, are financial transactions that involve the sale of a security with an agreement to repurchase it at a later date. These agreements are often used by banks and other financial institutions as a way to borrow money in the short-term. In Indonesia, repo agreements are regulated by Bank Indonesia through their ketentuan repurchase agreement.
Ketentuan repurchase agreement, or KRA, is a set of rules and regulations that govern the use of repurchase agreements in Indonesia. These rules were introduced by Bank Indonesia to ensure that repo agreements are conducted in a transparent and fair manner. The KRA covers a range of topics including the types of securities that can be used in repo transactions, the maximum tenor of repo agreements, and the collateral requirements for repo transactions.
One of the key requirements of the KRA is that repo agreements must be backed by collateral. This collateral can be in the form of cash, securities, or other acceptable assets. The value of the collateral must be at least equal to the value of the securities being sold in the repo transaction. This requirement ensures that the lender is protected in the event that the borrower defaults on the loan.
Another important aspect of the KRA is the maximum tenor of repo agreements. The KRA sets a maximum tenor of 7 days for repo agreements. This means that the borrower must repurchase the security within 7 days of the initial sale. This helps to reduce the risk for both the lender and the borrower as it limits the amount of time that the security is held by the lender.
The KRA also sets out rules for the valuation of securities used in repo transactions. The valuation of securities is important as it affects the amount of collateral required for the repo transaction. The KRA requires that securities used in repo transactions are valued at their fair market value. This ensures that the collateral requirement is based on an accurate and current valuation of the securities.
In conclusion, ketentuan repurchase agreement is a set of rules and regulations that govern the use of repo agreements in Indonesia. These rules help to ensure that repo transactions are conducted in a transparent and fair manner. The KRA covers a range of topics including collateral requirements, maximum tenor, and the valuation of securities. By following the KRA, financial institutions can engage in repo transactions with confidence and reduce the risk of default.