Good reads on Tri party repo market,
Crisis Chronicles: The Commercial Credit Crisis of 1763 and Today’s Tri-Party Repo Market.
Fire sales are one of the three systemic risk concerns highlighted in a May 2010 whitepaper by the Federal Reserve Bank of New York on tri-party repo infrastructure reform These three risks are 1) the market’s excessive reliance on clearing-bank provision of intraday credit to complete settlement, 2) poor liquidity and credit risk management practices on the part of various classes of tri-party repo market participants, and 3) the absence of any mechanism to mitigate the risk of fire sales of collateral in the aftermath of a large-dealer default.
Crisis Chronicles: The Commercial Credit Crisis of 1763 and Today’s Tri-Party Repo Market.
Fire sales are one of the three systemic risk concerns highlighted in a May 2010 whitepaper by the Federal Reserve Bank of New York on tri-party repo infrastructure reform These three risks are 1) the market’s excessive reliance on clearing-bank provision of intraday credit to complete settlement, 2) poor liquidity and credit risk management practices on the part of various classes of tri-party repo market participants, and 3) the absence of any mechanism to mitigate the risk of fire sales of collateral in the aftermath of a large-dealer default.
The first two these are being addressed or have been addressed but management of fire sale of collateral of defaulted dealer is still challenge, The Risk of Fire Sales in the Tri-Party Repo Market.
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