National Settlement Depository (NSD) and the Finance Committee of St. Petersburg have launched floating-rate repos using NSD's Collateral Management System (CMS). St. Petersburg is the first Russian region to offer liquidity (budget surpluses) through floating-rate repos.
The first auction took place on 29 November, with transactions settled on 30 November. The floating rate is linked to RUONIA, the weighted average benchmark interest rate widely used in Russia's money market.
The floating-rate repos entered into with the Finance Committee of St. Petersburg, with a maturity of 21 days, amounted to RUB 3 billion. The first counterparties are Sber and VTB Bank.
Alexey Korabelnikov, Chairman of the Finance Committee of St. Petersburg: “St. Petersburg has been addressing liquidity issues since 2004. Since 2019, we use repos and were the first Russian region to launch repos using NSD’s CMS. In this sense, we follow the suit of the Federal Treasury and make use of reliable liquidity management tools. Now, we have a floating-rate repo in our arsenal, which will provide banks with access to a new source of liquidity and generate additional revenues for the city.”
In opinion of Alina Akchurina, NSD’s Managing Director for Collateral Management and Tri-Party Services, “the use of NSD's CMS infrastructure offers participants advanced technologies and a possibility to set up terms and conditions that would be beneficial to both the creditor and the borrower. The time-tested solutions that allow using a floating rate in repos with collateral management can be flexibly adapted to the needs of a client and make it possible to use any monetary indicators, including settlement indicators, thus reducing interest charged in a transaction by the amount of legal reserve requirements applicable to banks.”