Office Of Financial Research Update: "Regulatory Arbitrage In Repo Markets"

The OFR released a working paper today entitled, "Regulatory Arbitrage in Repo Markets," and an accompanying blog by Greg Feldberg, OFR Acting Deputy Director for Research and Analysis. This paper documents a pattern of broker-dealers owned by foreign banks reducing their borrowing in the U.S. triparty repo market, a key source of short-term funding in the financial system, at quarter end and immediately returning to the market when a new quarter begins. This activity reduces their capital requirements under the leverage ratio.

The working paper is posted on the OFR website at: http://financialresearch.gov/working-papers/

The blog is posted at: http://financialresearch.gov/from-the-management-team/

The OFR home page is at: http://financialresearch.gov