SIFMA: US debt dominates triparty repo
25 July 2016 New York
Image: Shutterstock
US government securities still account for nearly half of the US triparty repo collateral pool, according to the Securities Industry and Financial Markets Association (SIFMA).
A recent update on market liquidity conducted by SIFMA showed that US government securities make up 48.5 percent of the triparty repo market, which itself makes up a significant portion of the entire US repo market.
Agency mortgage-backed securities and collateralised mortgage obligations account for 30.1 percent, and equities make up 7.1 percent of the triparty repo market.
The remaining collateral pool is made up of non-agency mortgage-backed and asset-backed securities, corporate bonds, federal agency and government sponsored enterprises securities.
In its annual US repo factsheet, which was updated on 21 July, SIFMA valued the daily turnover of the entire US repo market at $2.2 trillion.
The association pointed out that the US repo market is a 鈥渧ital, but not always well understood, part of the US financial system鈥�, which gives access to securities that are not in their own inventory in order to meet secondary market, or investor, demand.
SIFMA stated: 鈥淭he operational efficiencies developed through triparty repo and the largely-centralised settlement mechanism for repos further minimises risks.鈥�
鈥淚n addition, recent reforms in the triparty repo market have further enhanced the resiliency of this market. Market standard documentation, broadly accepted in the market, provides further certainty for market participants.鈥�
According to SIFMA, the US repo market contributes to lowering interest rates paid by the issuers, most notably the US treasury. This, in turn, lowers the debt-service cost borne by taxpayers.
A recent update on market liquidity conducted by SIFMA showed that US government securities make up 48.5 percent of the triparty repo market, which itself makes up a significant portion of the entire US repo market.
Agency mortgage-backed securities and collateralised mortgage obligations account for 30.1 percent, and equities make up 7.1 percent of the triparty repo market.
The remaining collateral pool is made up of non-agency mortgage-backed and asset-backed securities, corporate bonds, federal agency and government sponsored enterprises securities.
In its annual US repo factsheet, which was updated on 21 July, SIFMA valued the daily turnover of the entire US repo market at $2.2 trillion.
The association pointed out that the US repo market is a 鈥渧ital, but not always well understood, part of the US financial system鈥�, which gives access to securities that are not in their own inventory in order to meet secondary market, or investor, demand.
SIFMA stated: 鈥淭he operational efficiencies developed through triparty repo and the largely-centralised settlement mechanism for repos further minimises risks.鈥�
鈥淚n addition, recent reforms in the triparty repo market have further enhanced the resiliency of this market. Market standard documentation, broadly accepted in the market, provides further certainty for market participants.鈥�
According to SIFMA, the US repo market contributes to lowering interest rates paid by the issuers, most notably the US treasury. This, in turn, lowers the debt-service cost borne by taxpayers.
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