Fed plans repo markets revamp
23 June 2009
The US Federal Reserve is considering dramatic changes to the giant repurchase markets where banks around the world raise overnight dollar loans. The plans include creating a utility to replace the Wall Street banks that handle transactions.
The US Federal Reserve is considering dramatic changes to the giant repurchase – or repo – markets where banks around the world raise overnight dollar loans.The plans include creating a utility to replace the Wall Street banks that handle transactions, people familiar with the matter say.
The Fed’s deliberations are partly motivated by concerns that the structure of the US overnight repurchase market may have exacerbated the financial turmoil that accompanied the failure of Lehman Brothers in September last year. Fed officials plan to meet next month with market participants to discuss reforms.
People familiar with the Fed’s thinking say it is looking into the creation of a mechanism to replace the clearing banks – the biggest of which are JPMorgan Chase and Bank of New York Mellon – that serve as intermediaries between borrowers and lenders.
FT article
© Financial Times
