CBLO
This presentation is the property of its rightful owner.
Sponsored Links
1 / 17

CBLO PowerPoint PPT Presentation


  • 391 Views
  • Uploaded on
  • Presentation posted in: General

CBLO. Collateralized Borrowing and Lending Obligation. Indian Money Market. Call/ Notice/ Term Money Repo Commercial Paper Certificate of Deposit Treasury Bills CBLO. Why Money Markets?. Fixed Income Market (over 1 year) For borrowing long term For investing long term

Download Presentation

CBLO

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Cblo

CBLO

Collateralized Borrowing and Lending Obligation


Indian money market

Indian Money Market

  • Call/ Notice/ Term Money

  • Repo

  • Commercial Paper

  • Certificate of Deposit

  • Treasury Bills

  • CBLO


Why money markets

Why Money Markets?

  • Fixed Income Market (over 1 year)

    • For borrowing long term

    • For investing long term

    • For meeting reserve requirements (eg: SLR)

    • For trading interest rates along the yield curve

    • Money Market (under 1 year)

    • For borrowing/ lending short term funds

    • Bridging liquidity mismatches(mostly intra-day)

    • For meeting reserve requirements (CRR & SLR)


Indian money market1

Indian Money Market

  • T-Bill, CP, CD

    • Used by Govt., Corporates, Banks, FIs for short term borrowing

  • Call Money, Repo, CBLO

    • Used by Banks, MFs, FIs, Corporates to manage short term liquidity mismatches

  • Predominantly over night money market

    • Over 90% of activity in Call, Repo & CBLO in overnight segment


  • Overnight money market

    Overnight Money Market

    • Call/ Notice/ Term Money

      • Uncollateralized market

      • Participants: Banks & Primary Dealers only

    • Repo

      • Collateralized market

      • Participants: Banks, Primary Dealers, FIs, MFs, Corporates, insurance companies, NBFCs

    • CBLO

      • Collateralized market

      • Participants: Banks, Primary Dealers, FIs, MFs, Corporates, insurance companies, NBFCs


    Call notice term money market

    Call/ Notice/ Term Money Market

    • Uncollateralized market

  • Typically overnight market

  • Historically, most depended market for short term funds

  • Earlier consisted of both banks and non-bank entities (eg: MFs, Corporates etc.)

  • Historically, very volatile market

  • Most expensive due to uncollateralized nature

  • Highest counterparty risk in money market

  • Gradual phasing out of non-bank entities

    • Now, participants: Banks & Primary Dealers only


  • Cblo

    Repo

    • 100% collateralized dealing

    • Typically overnight market

    • More stable market less expensive than Call money

    • Collateral fussiness

    • Problems in collateral management

    • No early close out of position

    • No substitution of collateral


    What is cblo

    What is CBLO ?

    • CBLO was conceived and developed by CCIL for facilitating deployment in a collateralized environment.

    • It is a tripartite Repo transaction involving CCIL as third party and as central counterparty to borrower and lender

    • CBLO is an RBI approved money market instrument which can be issued for a maximum tenor of one year.

      • Is an instrument backed by Gilts as Collaterals

      • Creates an Obligation on the borrower to repay the money borrowed along with interest on a predetermined future date;

      • A Right and Authority to the lender to receive money lent along with interest on a predetermined future date or has the privilege to transfer the authority to anther person

      • Creates a charge on the Collaterals deposited by the Borrower with CCIL for the purpose.


    Why cblo

    Why CBLO?

    • to address the concerns of entities phased out of call money market or are subjected to borrowing/ lending restrictions

      • MFs, NBFCs, FIs, Corporates, Insurance Comp, Coop-Banks

    • to address the tenor ‘lock-in’ issues related to Repo

      • Buying/Selling CBLOs

    • to bring in better transparency

      • real time dissemination of quotes and dealt rates and market depth

    • to bring in better level playing field

      • access to wider member base, anonymity, guaranteed settlement

    • to have better price discovery in money market

      • pricing a function of demand & supply


    How does cblo operate

    How does CBLO operate?

    • A member deposits a set of eligible securities as collateral with CCIL

    • Borrowing limit: based on mark-to-market value and hair-cut applicable on securities deposited

    • Based on borrowing limit, CBLOs are issued to a member.

    • CBLO is an instrument that can be bought and sold.

    • Borrowing/ Lending is done by selling/ buying CBLOs

    • A borrower sells CBLOs to raise funds; a lender buys CBLOs to deploy funds


    How does cblo operate1

    How does CBLO operate?

    • Trading in CBLOs is facilitated on a dealing system called CBLO

    • CBLO dealing system is:

      • an electronic dealing system

      • for collateralized borrowing/ lending

      • in an anonymous environment

    • On any day, CBLO instrument for the next seven business days and three month end dates are made available\

    • Dealing allwed for settlement types: T+0 and T+1

    • CBLO is a discounted instrument traded on Yield:Time priority


    Settlement

    Settlement

    • Matched deals are novated and CCIL assumes the role of central counterparty

    • Settlement of deals guaranteed by CCIL

    • Obligation of members determined through multilateral netting of trades

    • First, net CBLO deliverable are debited from members account, securities underlying as collateral are blocked

    • Second, net funds deliverable by members is received

    • After funds received, CBLO credited to lender’s account and funds credited to borrower’s account

    • Shortage handing – LOC, creation of CBLO, blocking of funds receivable, blocking of CBLO receivable


    Lenders in cblo

    Lenders in CBLO


    Borrowers in cblo

    Borrowers in CBLO


    Cblo daily avg traded value cr

    CBLO Daily Avg. Traded Value (Cr.)


    Money market share

    Money Market Share


    Money market rates

    Money Market Rates


  • Login