Category Archives: International repo market

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If there’s an EU credit panic, repos could transmit it to U.S. banks

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Money market funds, interbank lending and the repurchase market would likely be the key sources of contagion for U.S. banks if Europe’s debt problems panic the credit markets, according to a July 21 article by Jeff Horwitz at the American … Continue reading

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Doubt cast on key tri-party repo reform

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Three years after the financial crisis, Wall Street banks still have not fixed one of the most dangerous flaws in the markets, and they said July 6 they will not be able to meet an October 2011 deadline for reform … Continue reading

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Press reports unclear on dangers of Greek default

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Last updated June 26, 2012 Commentary From the editor: The main reason world finance officials want to prevent Greece from defaulting on its debt is the same reason U.S. officials bailed out the investment banks in 2008:  To prevent a … Continue reading

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Proposal: Central clearing for repos

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Central clearing for repurchase transactions could prevent the kind of runs on the repo market that triggered the financial crisis in 2007-2008,  writes Jeff Penney, senior advisor to McKinsey & Company, managing member of financial services consulting firm High Line Advisors, and … Continue reading

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UK regulators warn of dangers in repo mutations

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Repurchase transactions are morphing into riskier forms of collateralized lending, the Bank of England warned in its June 2011 Financial Stability Report. With interest rates continuing at record lows, financial institutions and other investors are looking for ways to juice … Continue reading

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European repo leader wary of transparency

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The European repo community appears to be worried that regulators will require the repurchase market to become more transparent, based on a top repo official’s comments in a Financial News column June 13. Godfried De Vidts, chairman of the European Repo Council, … Continue reading

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Some experts are comparing Greece to Lehman

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If eurozone officials decide Greece does not have to repay its debt in full, the European Central Bank says it may stop making repo loans to financial institutions that put up Greece’s debt as collateral, according to a June 10 story by the … Continue reading

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London conference: More calls to fix bankruptcy exemption for mortgage-backed repos

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The special bankruptcy treatment extended to repurchase agreements in 2005 played a critical role in the financial crisis of 2007-2008, and changes must be made, experts cautioned at a financial conference in London June 1.   The warnings came just … Continue reading

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Securitized banking in Europe still stressed

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Securitized banking continues to be under stress in Europe, as can be seen in two unrelated news reports from Financial News on May 6 that show it is getting harder for some financial institutions to raise cash in Europe. In … Continue reading

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Will ‘ring-fencing’ work better than ‘firewalls’ did?

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We’re hearing a lot about “ring-fencing” these days. That sounds suspiciously like “firewalls” to some of us who covered the S&L calamity 20 years ago. Sheila Bair, chairman of the Federal Deposit Insurance Corp., thinks bank holding companies should ring-fence their investment banking operations … Continue reading

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Russia conducts first survey of its repo market

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The Russian Repo Council conducted it first biannual survey of the Russian repo market December 1, 2009, to May 31, 2010. The survey was designed with the help of the European Repo Council, which has conducted biannual repo surveys since … Continue reading

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Experts issue studies on repurchase market and systemic risk

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To RepoWatch readers: Some important work related to repos and systemic risk has been pouring out from economists and regulators in the past few days. I’ll be writing about each, trying to highlight the key points in simple language, but … Continue reading

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Could restricting short sales hurt repo market?

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European Union discussions to limit short selling, especially naked short selling, are meeting with objections from some of its member nations who fear the move would make it harder for them to raise money by selling debt on the repurchase … Continue reading

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FSA: Hedge funds rely on repos for funding

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A UK survey in September of just over 100 hedge funds shows the funds continued to rely more on repurchase agreements for funding than any other type of borrowing, but their total repo borrowing was down slightly from six months earlier. … Continue reading

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Repo continues long-term growth track in Europe

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The European repurchase market declined 15.3 percent in December, as compared to the prior June, because of the unwinding of some “very large and somewhat specialized transactions,” the European Repo Council reported March 10. The council did not identify the … Continue reading

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Bloomberg: Repo news briefs

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Recent  briefs from Bloomberg. For more detail, click on links: March 2: Remember when the Federal Reserve was keeping short-term repo rates low after the dot.com and Internet busts and the 9/11 attacks? Some blame those low interest rates for fueling the destructive … Continue reading

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Will the next run on repo be in Asia?

RepoWatch Commentary: Reading the following commentaries in the Wall Street Journal, knowing that bankers are developing repurchase markets in many countries, and realizing that our mega-banks are expanding internationally, does it seem that Asian bonds may be the next repo … Continue reading

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FT: European repo market showing signs of strain

The Financial Times reports that last week’s jump in bond yields was caused by traders’ fears that the eurozone repurchase market, “the plumbing of the global financial system,” was coming under strain. Last week the Swiss National Bank was reported … Continue reading

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Trouble in European repo land?

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European markets are worried about the state of the eurozone repurchase market, “which provides the flow of money that is the lifeblood of the financial system,” writes the Financial Times in a January 10, 2011, story. Banks are relying heavily … Continue reading

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NYU: Most of the leverage was in repos

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“Repo financing was the basis of most of the leveraged positions of the shadow banks.” From RepoWatch’s view, that’s the key sentence in “Regulating Wall Street,” a November 2010 book authored by New York University Stern School of Business professors Viral … Continue reading