Tri-Party Repo (TREPS)
Tri-Party Repo (TREPS) is a collateralised borrowing and lending mechanism in India's money market where the Clearing Corporation of India Limited (CCIL) acts as the tri-party agent, managing collateral allocation, valuation, substitution, and settlement on behalf of borrowing and lending participants.
TREPS was introduced by CCIL in November 2019 to replace the Collateralised Borrowing and Lending Obligation (CBLO) platform. The tri-party structure means that rather than bilateral negotiation and collateral management between two counterparties, CCIL intermediates: it receives the securities from the cash borrower's collateral account, values them daily, applies appropriate haircuts, and releases cash to the borrower. On the maturity date, the reverse transaction is completed automatically.
CCIL brings several efficiency advantages over bilateral repos. It provides collateral optimisation — automatically selecting the most appropriate eligible securities from the borrower's collateral pool to meet the lending amount — reducing the operational burden on participants. It also provides netting and central clearing, reducing counterparty credit exposure between participants. All TREPS trades are cleared and settled through CCIL's settlement guarantee mechanism, backed by a Settlement Guarantee Fund.
Participants in TREPS include scheduled commercial banks, primary dealers, all-India financial institutions, insurance companies, and mutual funds. Mutual funds are among the most active lenders in TREPS, deploying overnight cash surpluses at the TREPS rate rather than leaving them idle. The TREPS rate serves as a key overnight reference rate for Indian money markets, published daily by CCIL.
Eligible collateral comprises Central Government dated securities, Treasury Bills, State Development Loans, and specific RBI-notified instruments. Corporate bonds and commercial paper are not eligible TREPS collateral, which is an important distinction from some international tri-party repo platforms that accept a broader collateral set.
The TREPS market's daily volume typically runs into several lakh crore rupees, making it the largest segment of India's collateralised money market. The spread between the TREPS rate and the RBI's policy repo rate is closely monitored as an indicator of banking system liquidity: a negative spread (TREPS below repo rate) signals excess liquidity, while a positive spread above the repo rate suggests a liquidity deficit.