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It is hard to overestimate the dumpster fire of repo reporting by people (one is particularly egregious) who do not understand the plumbing. Repo IS plumbing. Every day. For trillions of dollars.
If you really care, there are some things to read to educate yourself.
If you really care, there are some things to read to educate yourself.
If you read any combo of three links, you will be far better informed than a 'practically founder of FinTwit'. Heck, one might do.
Start with a NYFed explainer. Learn who the players are and how it works. It's a bit old but fine. Note types of repo. newyorkfed.org/medialibrary/m…
Start with a NYFed explainer. Learn who the players are and how it works. It's a bit old but fine. Note types of repo. newyorkfed.org/medialibrary/m…
The ICMA has a whole section of their website where they will explain repo. It is quite good (note that European repo and US repo are different; it matters). It is reasonably up to date (i.e. up to date in structure but not in daily moves).
icmagroup.org/Regulatory-Pol…
icmagroup.org/Regulatory-Pol…
The BIS put out a decent paper on Repo Market Functioning a few years ago which goes into a few of the risks of how it would evolve over time due to Basel III, etc.
bis.org/publ/cgfs59.pdf
The BIS on post-crisis reforms (including bits on repo) is here: bis.org/bcbs/publ/d424…
bis.org/publ/cgfs59.pdf
The BIS on post-crisis reforms (including bits on repo) is here: bis.org/bcbs/publ/d424…
Basel III changes are a clear reason for many of the developments in repo market plumbing changes. They are highly technical. A non-bad explainer to the effect it would have on participants was a JPM primer on it for HFs.
jpmorgan.com/jpmpdf/1320634…
jpmorgan.com/jpmpdf/1320634…
NY Fed has a cool set of data in their page on tri-party and GCF repo (Statistics section - it's cool) and the links to the Tri‐Party Repo Infrastructure Reform Task Force from years ago. The links are old. Market has evolved since. 2015 update relevant.
newyorkfed.org/banking/tpr_in…
newyorkfed.org/banking/tpr_in…
There is a small explainer by the FRB here - more recent. Notes difference between bilat and tri-party. Good links at bottom. BNY Mellon is now the only tri-party *clearing bank* left. federalreserve.gov/econresdata/no…
Note that FICC (part of DTC) left one market but is now a major part of growing what is called 'sponsored repo'. Structure bypasses what banks used to do for HFs and requires no bank capital. Still small, but growing.
jpmorgan.com/global/researc…
bnymellon.com/us/en/what-we-…
jpmorgan.com/global/researc…
bnymellon.com/us/en/what-we-…
For more data, SIFMA has an annual report on US repo market balances, flows, etc and links to read more.
sifma.org/resources/rese…
ICMA has a great annual report on European repo.
icmagroup.org/assets/documen…
sifma.org/resources/rese…
ICMA has a great annual report on European repo.
icmagroup.org/assets/documen…
BAML wrote a decent survey a few years ago but I can't find it now.
As to "unprecedented" it also happened end Dec18. Whose fault? Ask the faucet whose fault it is that it is leaking.
In this spike, there are a variety of factors. Sometimes shit happens.
As to "unprecedented" it also happened end Dec18. Whose fault? Ask the faucet whose fault it is that it is leaking.
In this spike, there are a variety of factors. Sometimes shit happens.
It is a complex system. Lots of actors. Disparate liability calendars.
NB: Bankers/CBers hv bn making noise for YEARS saying repo infrastructure hadnt kept up w reg changes as they affected banks but US oversight split, not terribly active/responsive.
Maybe more later.
NB: Bankers/CBers hv bn making noise for YEARS saying repo infrastructure hadnt kept up w reg changes as they affected banks but US oversight split, not terribly active/responsive.
Maybe more later.
Meanwhile...
And if you want a slightly more technical explainer of the regulatory issues, can try here (some is in the BIS paper above and other BIS papers, and BoE did a good paper last year).
The trick under the current infrastructure is to figure out what is *not there* - i.e. given each bank’s or repo cp’s liquidity ladder how much excess marginal buffer is *not there* at any given time in the near future. That’s tough. It’s not advertised. Needs to be sussed out.
The Fed runs a Reverse Repo facility to deal with this in the other direction. An obvious outcome would be for them to run a repo facility.
Another thread which followed Tankus’ thread is here. Quanta not discussed but directionally feels right. This is the kind of thing a head trader might have been able to warn against but oops... NYFed’s HT left a few months ago and hasn’t been replaced.
Addendum as coiners are RTing this.
No clue who Glenn Beck is but to be clear, bitcoin in no way, shape, or form, "fixes" any of this. BTC as asset is just that - irrelevant. BTC as sole currency is just fixed money supply. It doesn't "fix" anything.
No clue who Glenn Beck is but to be clear, bitcoin in no way, shape, or form, "fixes" any of this. BTC as asset is just that - irrelevant. BTC as sole currency is just fixed money supply. It doesn't "fix" anything.
