Collateral Management and Settlement

The NBC ensures efficient settlement systems for its market operations by maintaining adequate mechanisms for recording transactions, managing collateral assets, and monitoring risk exposures.

For securities issued in NBCP, participants may manage their securities holdings and collateral transfers within NBCP. For example, eligible securities such as Government Bonds (G-bonds) and Negotiable Certificates of Deposit (NCDs) are issued, recorded, and transferred electronically through the NBCP in dematerialized form.

The National Bank of Cambodia (NBC) manages collateral by using the platforms in accordance with the type of monetary operation and the nature of the eligible collateral. The method of collateralization, whether through pledge, repurchase (repo), or blocking of current account balances, varies by operation to ensure appropriate risk control, operational efficiency, and legal certainty.

Pledge (OD)

The Overdraft facility provides short-term liquidity support to eligible counterparties. Under this facility, government bonds and Negotiable Certificates of Deposit (NCDs) are accepted as collateral on a pledge basis. The pledged securities remain the property of the counterparty but are blocked in the NBC Platform (NBCP) and cannot be used for other transactions until the overdraft expires.

Title Transfer (LPCO, MLF)

Liquidity-Providing Collateralized Operations are conducted through repurchase (repo) arrangements, under which counterparties temporarily transfer ownership (i.e, government bonds and NCDs) to the National Bank of Cambodia in exchange for liquidity, with an agreement to repurchase the securities at maturity. In addition to securities, current account balances may be used as collateral through a blocking mechanism, whereby funds are temporarily immobilized until the LPCO transaction is settled. This structure ensures effective liquidity provision while maintaining strong legal protection.

The Marginal Lending Facility is a standing facility that provides overnight or very short-term liquidity to solvent banks facing temporary liquidity shortages. Under this facility, government bonds and NCDs are accepted exclusively through short-term repurchase (repo) transactions. Current account balances are not used as collateral for MLF operations. All repo collateral is subject to valuation, haircuts, and margining in accordance with the NBC’s collateral framework.

All collateral pledged or transferred under these operations is valued monthly, subject to applicable haircuts, and monitored through the NBCP. The NBC reserves the right to apply margin calls, approve collateral substitution, or liquidate collateral in the event of default. Collateral is released promptly upon full settlement of the underlying obligation, and collateral requirements may be adjusted by the NBC in response to evolving market and risk conditions.