Repo costs rising as a result of leverage ratio

Low-margin, high-notional products being repriced says Pimco's Bill De Leon

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Repo costs are rising

The costs imposed on dealers by new rules such as the leverage ratio are beginning to trickle down from dealers to end-users, and have already hit repo markets, according to Pimco's global head of portfolio risk management, Bill De Leon. Repo is suffering because it is a low-margin business that involves high gross notional numbers, on which the leverage ratio weighs most heavily. "If you look at the repo market, I think it's showing up very, very quickly there because that is a gross notiona