Collateral

Short-term funding markets often require that borrowers pledge securities as collateral against the possibility they may default on a loan. Types of collateral vary and can influence the rate of return charged for short-term funding and the willingness of lenders to extend such funding. The types of securities that appear as collateral can also indicate the security positions for which borrowers need financing. These charts present insights into the types of collateral used to secure funding across various short-term funding markets.

GCF repo transaction volume by collateral type

Transaction volume in the Fixed Income Clearing Corporation's (FICC) GCF Repo Service broken out by collateral type

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The market for repurchase agreements (repo) supports cash market liquidity and price discovery by allowing dealers to fund their securities portfolios using securities as collateral. FICC's GCF Repo Service is a centrally cleared platform for this activity.

This chart shows a breakdown of GCF Repo Service volumes by the underlying security used as collateral. In GCF Repo Service, participants can exchange only securities that are eligible for Fedwire settlement: Federal Agency and Government-sponsored Enterprise (GSE) securities and Treasuries. Looking at the volume of repo secured by each type of collateral provides a sense of which securities borrowers want to finance. Large movements in these volumes can indicate changes in demand for financing specific types of securities.

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Suggested Citation

Office of Financial Research, “OFR Short-term Funding Monitor,” refreshed daily, https://www.financialresearch.gov/short-term-funding-monitor/ (accessed ).