The Reserve Bank of Australia has given itself a month to get to know the mortgage backed securities and asset backed commercial paper markets before implementing its policy of accepting RMBS and ABCP for repurchase agreements.The RBA will use that time to construct a pricing model for those two classes of securities, which have been hard hit in the wake of the sub-prime mortgage crisis.This might seem like a hard job, given that investors have withdrawn from the RMBS and ABCP market precisely because they do not feel confident about pricing their risk in those markets.But the RBA has an advantage not enjoyed by the investors. It will apply a margin of 10 per cent on repurchase transactions involving RMBS and ABCP.This margin will act as a buffer. The margin on repurchase agreements involving Commonwealth, state and territory borrowing, bills and certificates of deposit is two per cent.The RBA announced yesterday that eligible securities for repurchase agreements would be expanded to include bills and CDs issued domestically by any authorised deposit-taking institution that holds an exchange settlement account with the central bank. Previously the RBA's trading in bills and CDs was limited to those issued by a small number of banks.That change will take effect on September 17. Also on that date the RBA will accept Australian dollar bonds issued by an ADI and rated A3 or above for repurchase agreements.The changes affecting RMBS and ABCP will take effect on October 8.The RBA will deal only in securities lodged in Austraclear. As at present, a repo counterparty will not be able to offer securities issued or supported by itself or a related party.The RBA's trade in repurchase agreements is one of its chief means of ensuring that the supply of exchange settlement balances in the banking system is sufficient for the cash market to clear each day at the target cash rate. RBA deputy governor Ric Battellino told delegates at a retail banking conference in Sydney late in August that the bank's supply of exchange settlement funds into the banking system reached a peak of $5.5 billion in the middle of the month, the highest level for some years.