Reference Guide to U.S. Repo and Securities Lending Markets

Abstract

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The use of collateral in bilateral repurchase and securities lending agreements

“…Motivated by the recent financial crisis, regulators have begun to collect detailed data on securities financing transactions to obtain a deeper, detailed understanding of these trades. 2 To date, these collections are not comprehensive, but rather focused on only some of the segments of the overall market (Baklanova, Copeland, and McCaughrin (2015)). Consequently, although there is a growing literature on the U.S. tri-party repo and parts of the securities lending market, little is known about the bilateral securities financing market, a large segment of the overall securities financing activity.…”

“… See Lipson, Sabel, and Keane (2012) andBaklanova et al (2016b) for detailed empirical work on these securities lending entities.28 For the SEC guidance on securities lending by U.S.-registered funds, see https://www.sec.gov/divisions/investment/securities-lending-open-closed-end-investment-companies.htm. 29 See Investment Company Institute, 2014.…”

A theory of repurchase agreements, collateral re-use, and repo intermediation

“…In their guide to the repo market,Baklanova et al (2015) state that "dealers operate as intermediaries between those who lend cash collateralized by securities, and those who seek funding".…”

Government of Canada Securities in the Cash, Repo and Securities Lending Markets

“…First, only 10 per cent to 15 per cent of the stock of GoC instruments on loan is against cash. This is in contrast to the United States, where the majority of lending is against cash (see Baklanova, Copeland and McCaughrin 2015). This fact underlies our classification of lending activity as mainly security-driven.…”