US Repo Market Fact Sheet, 2017

An annual update and overview to the U.S. repo market.

Summary

With notional amount outstanding of $2.3 trillion, the repurchase agreement market is a vital, but not always well understood, part of the U.S. financial system. The repo market represents a liquid, efficient, tested and safe way for firms to participate in a short-term financing arrangement, providing funding for their day-to-day business. Repurchase agreements, or repos, are a sale of financial assets combined with a promise to repurchase those assets in the future (in many cases, the repurchase is agreed for the following business day). These arrangements have the economic characteristics of a secured loan – cash vs. collateral – and are used by short-term institutional cash investors as a secured money market instrument and by dealers as a way to finance long positions in securities.

While a broad array of assets may be financed in the repo market, the financial assets most commonly used include U.S. government and Federal agency securities, high quality mortgage-backed bonds, corporate bonds and money market instruments. Recent data for the tri-party repo (a form of repo that uses an agent to maintain cash and securities accounts for both parties) market, which represents a significant part of the entire U.S. repo market, indicates that U.S. government securities account for approximately 54.3 percent by dollar value of the most common collateral types, agency mortgage-backed securities and collateralized mortgage obligations account for 26.3 percent, and equities make up 6.9 percent.

Capital Markets

  • Managing Director, Assistant General Counsel: Robert Toomey
  • Associate, Capital Markets: Robert Rogerson
  • Senior Associate, Research: Justyna Podziemska
  • Intern, Research: Emily Losi