Ghana has launched guidelines for the Global Master Repurchase Agreement (GMRA) to support cash-market efficiency and liquidity and has scheduled its implementation for April 2, next year.
The event was also used to launch the Ghana Fixed Income Market, which has been in operations since August 2015, to facilitate the secondary trading of all fixed income securities and other securities to be determined from time to time.
The GMRA is a master agreement used globally and published by the International Capital Market Association. It contains standard provisions suitable for the most common types of repo business – the sale of a quantity of securities.
The benefits of the guidelines for Ghana include the provision of low-risk option for cash investment and it will enable investors to monetise liquid assets.
Dr Ernest Addison, the Governor of the Bank of Ghana (BoG), who announced the date on Tuesday, also said a well-functioning repo market contributed to the efficient allocation of capital in the real economy by supporting liquidity in other markets.
Dr Addison said the huge potential of repos as reliable and cost-effective source for short-term funding for market participants could not be underestimated.
He said the BoG would issue a notice to clarify the eligibility of netting arrangements under the current Banks and Specialised Deposits Taking Institutions Act (BSDTI Act).
Launching the guideline, Vice President Dr Mahamudu Bawumia, said the success of the GMRA-based repo trading guidelines required adequate training of the relevant stakeholders.
He said the introduction of the GMRA would help address the existing gaps in the country’s securities market and assist in deepening the market, adding that, it would also aid trading of repos in the light of international standards.
Mr Ken Ofori-Atta, the Minister of Finance, said the launch of the guidelines was in the right direction and timing as the country positions her economy to support the African Continental Free Trade Agreement.
Mr Ofori-Atta said the GMRA would improve data certainty to investors in the repo market and by extension, provide more liquidity in the primary and secondary local currency bond markets, which remained a key source of financing for the government budget.