China announces retail repo market. On 14 February, the PBOC announced a measure to boost the development of the bond market and increase direct financing by opening the Bank OTC Market. This is an extension to the existing interbank bond market. It is open to a wider range of investors including smaller financial institutions, licensed investment companies, qualified corporates and qualified retail investors (defined as having annual income over the equivalent of about GBP 50,000 and assets over GBP 300,000). Financial institutions wishing to trade in this market segment have to meet certain conditions and file with the PBOC. The market can trade central and local government bonds, PBOC paper and policy bank bonds through cash transactions, and pledged and outright repo. But it appears that non-qualifying investors can trade and repo AAA bonds.

The existing OTC market has allowed non-bank financials in since 1999 and some large corporates since 2002. The exchange-based market already allows retail investors but these are mainly money funds.

The Philippine Treasury has announced an initiative to try to reinvigorate its flagging government bond market, as expected US rate rises threaten to divert cross-border capital.  The plan is to accelerate and be more selective in the restructuring of the maturity profile of its debt through bond swaps. The Treasury is also looking at a primary dealer system and open the market to tax-exempt institutional investors like state-run pension funds. Prior to appointing primary dealers, it wants to revive the flagging repo market.

The Philippines has a large domestic bond market that has been playing a growing role in financing its development. Bloomberg reported that the ratio of domestic borrowing to total debt may increase to 88 percent next year and to 89 percent in 2017 from a planned 86 percent this year. But average daily bond trading fell to PHP 18.2 billion pesos last year, a three-year low, from over 20 billion in 2012 and 2013.

Plans for the repo market have not been elaborated but the Treasury is in discussion with the central bank and the Securities and Exchange Commission about an interbank “Specials Repo” programme. The scope for reviving repo was improved in January, when the Bureau of Internal Revenue agreed to exempt the repos from documentary stamp tax as long as these are transacted on a “true sale basis”.

At the moment, the repo market in the Philippines is dominated by the Inter-Professional Repurchase Agreement Market, an electronic platform run by PDEx, the Philippine Dealing & Exchange System, a subsidiary of the Philippine Dealing System Holdings Corporation (PDS), which also runs the Fixed Income Exchange (FIE), the Public Market segment for retail brokers, the Inter-Professional Market for institutional investors and an electronic Securities Lending/Borrowing platform for dealers, as well as the local SSS and CSD. The PDEx repo market has not prospered, another of the many examples suggesting repo and exchanges do not fit well together.