2/ A new OFR paper (dropped Friday) dives deep into this dynamic, providing fresh flow data.
Here's what it uncovered:
65% of received collateral is rehypothecated.
This is below the Federal Reserve's Regulation T limit of 140%.
Here's what it uncovered:
65% of received collateral is rehypothecated.
This is below the Federal Reserve's Regulation T limit of 140%.
Comments
For example, dealers often reuse GC collateral in tri-party repos to raise cash.
That cash can then be lent into NCCBR and DVP markets.
$175 million for Treasuries.
$209 million for non-Treasuries.
These margins are driven by offsetting transactions with rehypothecated collateral.
US Bonds Markets
With the OFR’s initiative, we gain a clearer view of the mechanisms behind the most liquid market in the world.
#econsky #repo #stir #rates