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Benefits and Risks of Central Clearing in the Repo Market

Author

Listed:
  • Viktoria Baklanova

    (Office of Financial Research)

  • Ocean Dalton

    (Office of Financial Research)

  • Stathis Tompaidis

    (Office of Financial Research)

Abstract

The repurchase agreement (repo) market is a major source of short-term funding in the financial system. Many repo transactions between dealers are centrally cleared. This brief, using data from the OFR's interagency bilateral repo data collection pilot, finds economic benefits for dealers in expanding central clearing to transactions between dealers and nondealer clients, but increased risks to the central counterparty.

Suggested Citation

  • Viktoria Baklanova & Ocean Dalton & Stathis Tompaidis, 2017. "Benefits and Risks of Central Clearing in the Repo Market," Briefs 17-04, Office of Financial Research, US Department of the Treasury.
    • Handle: RePEc:ofr:briefs:17-04
    as

    Download full text from publisher

    File URL: https://www.financialresearch.gov/briefs/files/OFRBr_2017_04_CCP-for-Repos.pdf
    File Function: First version, 2017
    Download Restriction: no
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    Citations

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    Cited by:

    1. Massimiliano Affinito & Matteo Piazza, 2021. "Always Look on the Bright Side? Central Counterparties and Interbank Markets during the Financial Crisis," International Journal of Central Banking, International Journal of Central Banking, vol. 17(1), pages 231-283, March.
    2. Cyril Monnet & Thomas Nellen, 2021. "The Collateral Costs of Clearing," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 53(5), pages 939-970, August.
    3. van Horen, Neeltje & Kotidis, Antonios, 2018. "Repo market functioning: The role of capital regulation," CEPR Discussion Papers 13090, C.E.P.R. Discussion Papers.
    4. Miguel Fernandes & Mario Pascoa, 2024. "Repo, Sponsored Repo and Macro-prudential Regulation," School of Economics Discussion Papers 0224, School of Economics, University of Surrey.
    5. Noss, Joseph & Patel, Rupal, 2019. "Decomposing changes in the functioning of the sterling repo market," Bank of England working papers 797, Bank of England.
    6. Cristina Di Luigi & Antonio Perrella & Alessio Ruggieri, 2024. "The fundamental role of the repo market and central clearing," Mercati, infrastrutture, sistemi di pagamento (Markets, Infrastructures, Payment Systems) 48, Bank of Italy, Directorate General for Markets and Payment System.

    More about this item

    Keywords

    central clearing; repurchase markets; data collection pilot; central counterparties;
    All these keywords.

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