A repo trade terminates on the repurchasing date stipulated in the contract. However, KRX may execute a repurchasing earlier than scheduled, for the stability of the repo trade, under certain circumstances as below. If the cause for early repurchasing stems from the bonds of the contract, only the corresponding contract terminates. When the cause arises from a trade counterparty, all agreements of non-repurchasing associated with the counterparty terminate. In the case of an early repurchasing, the repurchase date is the day when the cause occurs.
|Cause for Termination||Repurchasing Method||Classification of Repurchasing|
||Repurchasing an individual contract||Schduled repurchasing|
||Repurchasing the individual contract||Early repurchasing|
||Repurchasing all contracts as a single agreement|
KRX guarantees the settlement of a repo trade as a clearing agency, pursuant to provisions in the FSCMA, thus assuming the role of a central counterparty to a seller and a buyer. As a triparty agent, KRX provides each counterparty with buy-back services for an agreement of non-repurchase until the original repo contract terminates. As a result, market participants may participate in the repo market without concerns about risks of default.
KRX has adopted settlement by netting, which combines settlement for daily trading, settlement for repurchasing, and additional margin and netting by market participant. KRX conducts settlement on a delivery-versus-payment basis.