The Wall Street Journal has reported that the Fixed Income Clearing Corp. may seek permission, as soon as next month, from the Federal Reserve and the Securities and Exchange Commission to clear repo trades between banks and certain qualified investors such as mutual funds (see, Large Banks Backing New Safeguards in Short-Term Lending Markets, subscription required).

The article reports that regulators are eying central clearing as a means to reduce “fire sales” of collateral and to further promote the stability of the repo market. Currently repo dealers may trade cleared repo between themselves.

Good Clearing. Good Day. DR2