OFR Short-term Funding Monitor - Insights

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.

Primary dealer repos by collateral type

Aggregate volume of repo for primary dealers broken out by type of collateral

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Primary dealers serve as intermediaries in securities markets, receiving securities from sellers and delivering them to buyers. Dealers commonly provide repurchase agreement (repo) financing to client funds, and use this type of financing to fund both this lending and their own securities inventories. The types of collateral in their repo activity reflect the aggregate composition of collateral in short-term funding markets. This composition varies with the issuance activity of issuers, dealers' balance sheet capacities, and risk associated with various forms of collateral. Large movements in these volumes can indicate changes in demand for financing specific types of securities.

This chart shows dollars outstanding in primary dealer repo agreements by the type of underlying collateral.

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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 ).