July 8, 2019 / 11:03 AM / 5 months ago

Shanghai exchange curbs bond issuers' use of repos in structured financing - sources

SHANGHAI, July 8 (Reuters) - The Shanghai stock exchange is curbing bond issuers from using repurchase agreements, or repos, in structured financing, four sources told Reuters on Monday, as regulators step up efforts to contain financial risks.

In a notice issued by the exchange, regulators also urged institutions to strengthen risk-management in the repo businesses, the sources said.

In such structured financing business, issuers use their own bonds as collateral to borrow money from the market, a practice that increases leverage and risks in the financial system. (Reporting by Steven Bian, Xiaochong Zhang and David Stanway; Writing by Samuel Shen; Editing by Richard Borsuk)

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