Frontclear and Parallax Valores (Parval) close a market first GMRA documented cross-border repo against DOP-denominated collateral
March 28, 2024
Frontclear and Parval concluded a USD 12 million repo trade, using locally issued, DOP denominated Dominican Republic government bond collateral. This trade is the first ever cross-border repo trade in the Dominican Republic against local currency collateral.
The repo transaction is documented under standard GMRA 2011 and funded by FCC Securities (a 100% owned subsidiary of Frontclear), which established local custody infrastructure to secure title transfer of the collateral and DOP cash. The successful conclusion of this landmark trade demonstrates firsthand the benefits of using international market standard documentation including clarity on key aspects such as title transfer of collateral and enforceability of GMRA provisions in a close-out scenario.
Money markets are the most fundamental layer of financial markets, supporting maturity transformation and responsible lending practices of banks, deepening of government security markets, and allowing for effective transmission of monetary policy signals.
“We are proud to have structured a first-of-its-kind cross border repo transaction using locally currency government bonds as collateral. Frontclear has built the necessary custody and cash account infrastructure needed to secure local currency repos and we believe that this trade sets a benchmark for the development of Dominican Republic’s money market going forward.”
– Daniel Baeza, SVP Frontclear
"We are honored by Frontclear's trust in Parval for this landmark transaction, the first of its kind in the Dominican Republic. This initiative, which uses Dominican peso-denominated bonds, demonstrates our commitment to innovation and progress in the financial market. It is a significant step to not only deepen and strengthen our market's resilience but to also consolidate our financial infrastructure, paving the way for further growth and stability."
– Pedro Vazquez, Treasury Director, Parval