Repo Market Intermediation

By Robert Mann, Mark Paddrik, Samuel Hempel, and R. Jay Kahn

Published: November 14, 2024

Cash and Collateral Flows by Repo Market Segment ($ billions)

Dealers manage cash and collateral on their balance sheet and across counterparties to facilitate short-term funding markets. This brief provides a comprehensive view of how dealers perform this pivotal service for borrowers and lenders through a high degree of collateral reuse. In doing so, they must transform counterparty, collateral, and maturity risks on their balance sheets. This analysis examines the size and compensation that dealers receive for these risks, which, when improperly managed, can threaten financial stability (Brief no. 24-07).

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