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The financial plumbing of the GCF Repo® Service

Author

Listed:
  • Paul Agueci
  • Caroline Prugar
  • Leyla Alkan
  • Tyisha Rivas
  • Adam Copeland

    (Research and Statistics Group
    National Bureau of Economic Research
    Federal Reserve Bank of New York
    Federal Reserve Bank)

  • Kate Pingitore

Abstract

The authors describe the ways that intraday credit was used to facilitate the settlement of trades before reforms to the tri-party repo settlement system. In particular, they focus on two main processes: the end-of-day settlement and the morning unwind. The authors then describe why this extension of intraday credit by the clearing banks is problematic, specifically pointing to concerns that a clearing bank may not be able to absorb the impact of a failing dealer. The authors also discuss various reforms to the tri-party repo settlement process, which, they note, are likely to influence the costs of settling GCF Repo transactions.

Suggested Citation

  • Paul Agueci & Caroline Prugar & Leyla Alkan & Tyisha Rivas & Adam Copeland & Kate Pingitore, 2015. "The financial plumbing of the GCF Repo® Service," Economic Policy Review, Federal Reserve Bank of New York, pages 7-24.
  • Handle: RePEc:fip:fednep:00025
    as

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    File URL: https://www.newyorkfed.org/medialibrary/media/research/epr/2015/epr_2015_primer-on-the-gcf-repo-financial-plumbing_lo.pdf?la=en
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    References listed on IDEAS

    as
    1. Mills Jr., David C. & Nesmith, Travis D., 2008. "Risk and concentration in payment and securities settlement systems," Journal of Monetary Economics, Elsevier, vol. 55(3), pages 542-553, April.
    2. Brian Begalle & Antoine Martin & James McAndrews & Susan McLaughlin, 2016. "The Risk Of Fire Sales In The Tri-Party Repo Market," Contemporary Economic Policy, Western Economic Association International, vol. 34(3), pages 513-530, July.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    financial intermediation; GCF Repo; tri-party repo reforms;

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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