Muqassa launches REPO Clearing Service in the Saudi capital market

The Securities Clearing Center Company (Muqassa) today announced the launch of its Repurchase Agreement (REPO) Clearing Service.

Muqassa’ s REPO Clearing service, a form of short-term borrowing, will be available to General Clearing Members and investors. and will be settled by the Securities Depository Center Company (“Edaa”).

The repurchase agreement clearing and settlement service is part of Muqassa ongoing efforts to meet the various needs of investors and clearing members, the service will help mitigate risk, increase transparency, and shift liquidity from unsecured to secured lending markets at lower costs. It will facilitate access to liquidity for market participants with improved operational efficiencies while reducing overall market risk.

This launch of the REPO Clearing service follows the implementation of a bundle of post trade infrastructure enhancements to the Saudi capital market in April 2022.

Wael Al-Hazzani, CEO of Muqassa commented: “The launch of Muqassa’ s REPO Clearing service marks an important step in our company’s journey as it furthers our ability to facilitate efficient clearing on the Saudi capital market. Centralized clearing of Repo Transactions will Increase transparency in OTC transactions and ensure a stable and well-functioning market where Muqassa’s enhanced risk management processes will reduce overall market risk to its members and investors.”

The repurchase agreements are an important source of secured short-term financing, complementing other sources of financing in the banking system, in addition to enhancing the depth of the Sukuk and bond markets in Saudi Arabia.

The first Repurchase agreement has been executed, cleared and settled with a notional value of SAR 500 million on Saudi Government Sukuk.

The latest enhancements enabled Muqassa activation of the central clearing services in the main market, parallel market, sukuk, bonds and exchange traded funds. Muqassa has successfully completed its full activation to cover all exchange traded products in the Saudi Exchange. Muqassa establishment and operation is one of the main Financial Sector Development Program initiatives under Vision 2030.