Repo intermediation and central clearing : an analysis of sponsored repo

Adam Copeland, R. Jay Kahn

This paper evaluates the salient forces behind a dealer-intermediary's decision to move a bilateral repo transaction with a customer into central clearing. We provide evidence that dealers turn to sponsored repo on occasions when balance sheet space is scarce, such as when there is a large issuance of Treasury coupon securities and end-of-month dates. We also find that sponsored repo spreads tend to be affected by a range of factors, with the three largest drivers being money market fund assets, a proxy for hedge fund demand for repo funding, and end-of-month dates.

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Year of publication:	[2024]
Authors:	Copeland, Adam ; Kahn, R. Jay
Publisher:	[New York, NY] : Federal Reserve Bank of New York
Subject:	repo \| sponsored services \| central clearing \| money markets \| Repo-Geschäft \| Repo transactions \| Geldmarkt \| Money market \| Clearing \| Financial clearing \| Finanzintermediation \| Financial intermediation \| OTC-Handel \| OTC market