Inventory limits behind collapse in equity repo rates

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To an outsider, the implied equity index repo rate might sound like one of the quiet backwaters of the financial markets. In fact, it’s a key risk measure for exotic equity desks, and is closely watched by their delta-one cousins as a signal of a classic arbitrage opportunity. It has also been anything but quiet. In recent months, the rate has collapsed to unheard-of levels, which traders say is a sign the usual relationship between these two different

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