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RSP

This is the system banks and brokerage firms use to set up same-day repo agreements with Banco de México. The RSP and SAGAPL are the systems used by Banco de México to provide liquidity to the payment systems.

In the RSP system, the participant banks and brokerage firms are allowed to enter a repo agreement with Banco de México at any time during the operation schedule. The repo’s maturity is the time between the beginning of the operation and the system’s close of daily operations. However, participants are allowed to conclude repo operation at any time during operating schedule.

To obtain liquidity at RSP, a brokerage firm requires the authorization of at least one bank, which establishes a limit to the value of all the repo agreements the brokerage firm can enter. In addition, Banco de México establishes a limit for the repo agreements’ value in pesos allowed for each participant. These limits are established as a function of each participant’s capital. When a brokerage firm wants to enter a repo agreement, it issues a request to the RSP, indicating the bank through which the operation will be conducted. The RSP verifies the limit established by the bank for the brokerage firm and the limit for the bank established by Banco de México. The system then produces two operations which are settled simultaneously: one between Banco de México and the bank that granted the permit to implement the repo agreement, and another between the bank and the brokerage firm.

Banco de México only accepts repo agreements with securities as collateral issued in Mexico by the federal government, the Institute for the Protection of Bank Savings (IPAB), and Banco de México, and only those securities that trade on secondary markets. At present the interest rate charged for repo operations is zero. Participants choose where the funds are credited: in their SIAC or SIDV accounts.

If a brokerage firm cannot fulfill its obligations at the maturity of its repo agreements, Banco de México cancels the operations with the brokerage firm and transfers the obligations to the bank involved. If a bank cannot fulfill its obligations, the repo agreements are automatically renewed for one day. This renewal process can be repeated for 10 consecutive days. If at the end of the eleventh day, the bank does not conclude a repo agreement, Banco de México cancels it and holds the collateral securities. In relation to Banco de México’s policy on daily balances, in SIAC every repo agreement that is automatically renewed for one day is considered a charge to the bank’s SIAC account.

The operating rules for the RSP system are established in paragraph M.73 of the circular 2019/95 for commercial banks, paragraph BD.51 of the circular 1/2006 for noncommercial banks, and paragraph CB.2 of the circular 115/2002 for brokerage firms. All of these circulars were issued by Banco de México.