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The repurchase agreement (repo) market is a foundational component of the U.S. financial system, providing trillions of dollars of daily funding and facilitating liquidity for U.S. Treasuries and other securities. The repo market allows participants to borrow cash against securities pledged as collateral, with an obligation to repurchase those securities in the future.
The U.S. repo market can be divided into four major segments, depending on two factors: One, whether the trades are settled bilaterally or through a triparty custodian, and two, whether the trades are centrally cleared or non-centrally cleared. The largest of the four segments, with an estimated market size exceeding $2 trillion outstanding, is the non-centrally cleared bilateral repo (NCCBR). This is the only segment of the market that contains neither a central counterparty nor a triparty custodian.
Despite the increase in market transparency provided by the OFR's Centrally Cleared Repo Data Collection and the Federal Reserve's collection of non-centrally cleared triparty repo, the NCCBR segment remains opaque to regulators. Even the traders who conduct business in this market have little direct visibility into the competitive landscape. Given the size and importance of this market, regulators have expressed concern over this lack of transparency.
As a starting point to provide regulators with more information on the market, the OFR secured the voluntary participation of nine dealers for a pilot data collection. These dealers include primary dealers and nonprimary dealers, bank affiliated and nonbank affiliated dealers, and both purely domestic dealers and dealers that are affiliates of foreign institutions.
The OFR collected NCCBR transaction-level data from these dealers for three days in June 2022. Each voluntary participant provided details on all outstanding read more.
