The Federal Reserve Bank of New York (FRBNY) has provided its first public update on the status of Tri-Party repo reform in over a year.
The update makes the following points:
- The new settlement processes for Tri-Party Repo put in place by the tri-party clearing banks has been substantially completed;
- The amount of intra-day credit extended by the clearing banks and used to settle tri-party repo has fallen from 100% as late as 2012 to 3-5% today;
- Certain work remains to fully integrate General Collateral Finance (GCF) repo with the new settlement processes for tri-party repo;
- Fire sale risk is a remaining policy concern of FRBNY but acknowledges industry efforts to develop centrally cleared repo which could help mitigate fire sale risk.
Good Day. DR2