How Competitive are U.S. Treasury Repo Markets?

Kevin Clark, Adam Copeland, Robert Kahn, Antoine Martin, Matthew McCormick, Will Riordan and Timothy Wessel

No 20210218, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: The Treasury repo market is at the center of the U.S. financial system, serving as a source of secured funding as well as providing liquidity for Treasuries in the secondary market. Recently, results published by the Bank for International Settlements (BIS) raised concerns that the repo market may be dominated by as few as four banks. In this post, we show that the secured funding portion of the repo market is competitive by demonstrating that trading is not concentrated overall and explaining how the pricing of inter-dealer repo trades is available to a wide range of market participants. By extension, rate-indexes based on repo trades, such as SOFR, reflect a deep market with a broad set of participants.

Keywords: repo; concentration; competitiveness (search for similar items in EconPapers)
JEL-codes: G1 (search for similar items in EconPapers)
Date: 2021-02-18
New Economics Papers: this item is included in nep-fmk
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