The Post-Crisis Market for Tri-Party Repurchase Agreements

Abstract

This study examines the post-financial crisis market for tri-party repurchase agreements ("repo"), highlighting the details that make this market function properly after the run on the repo market during the financial crisis and explaining the systemic need for the market itself. In addition, it will analyze the effects of regulatory changes aimed at supporting and restructuring the current system. The data gathered for this project revolves around the recent ramp up of the Federal Reserve System's use of reverse repurchase agreements to regulate market repo rates in addition to the effects of changes in the Federal Reserve's balance sheet on the volumes of securities used as collateral in repo transactions. Finally, estimates will be made on the systemic effects of unloading the Federal Reserve's balance sheet on the many aspects that make the tri-party repo market function efficiently.