![]() ![]() In response, dealer transactions in the repo market have declined and the way banks fund themselves has fundamentally been altered.Īs Roever points out, the gross size of the repo market now stands at approximately $5.1 trillion, according to the Fed’s most recent primary dealer financing data. Bank capital requirements, such as Basel’s Leverage Ratio and the Global Systemically Important Bank (G-SIB) capital surcharge, require banks to hold capital against exposures associated with secured lending. ![]() The first signs of the financial crisis bubbled up in this corner of the market, also dubbed the lifeblood of Wall Street by the press, when dealers could no longer roll their significant repo exposures as liquidity rapidly dried up.Īfter Lehman Brothers failed, banks and regulators recognized the risks associated with short-term funding, both unsecured and secured, and ushered in a new series of rules.
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