Swaps market’s health seen as resting on sickly repo

Isda AGM: Panellists warn repo market is risky way to fund swaps margin

Financial health
If longer-term repo trading was more common it would help the funding of OTC margining, said panellists

The future health of over-the-counter derivatives trading is increasingly dependent on the ailing repo market, buy- and sell-side participants have warned.

Ties between the two markets are not new, but the growing need for collateral to support both cleared and non-cleared OTC trading means swaps market participants are more reliant on the ability both to exchange cash and securities via repo and to continue rolling those repo transactions over – roughly 70% of the $2.2 trillion US repo market

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