EBA Consults on Guidelines Related to Tri-Party Repurchase Agreements

Under the alternative treatment, an institution can replace the total amount of its exposure to a collateral issuer due to tri-party repurchase agreements facilitated by a tri-party agent, with the full amount of the limits that the institution would instruct the tri-party agent to apply to securities issued by the collateral issuer. To be able to conduct the aforementioned replacement, institutions must observe certain conditions. The guidelines specify those conditions, including the frequency for determining, monitoring, and revising the full amount of the limits instructed by the institution to the tri-party agent. Moreover, the guidelines:

• Recommend a set of elements that an institution and a tri-party agent should include in their service agreement for the use of the alternative treatment
• Establish a set of safeguards that the tri-party agent has to put in place and for which the institution needs to verify the appropriateness for the use of the alternative treatment
• Specify how institutions should determine the limits to be applied by a tri-party agent with regard to the securities of a collateral issuer as well as the general framework under which such limits can be revised
• Provide a non-exhaustive list of circumstances that could lead the competent authority to raise material concerns and that would prevent the use of the alternative treatment by institutions
• Specify a procedure for dealing with the above-mentioned material concerns

The guidelines will be translated into the official EU languages and published on the EBA website. The deadline for competent authorities to report whether they comply with the guidelines will be two months after the publication of the translations. 

Related Links

• Press Release
• Consultation Paper (PDF)

Comment Due Date: October 22, 2020

Keywords: Europe, EU, Banking, CRR, Large Exposures, Basel, Repurchase Agreement, Repo, EBA