The Senate Banking Subcommittee on Securities, Insurance, and Investment convened a hearing today on remaining obstacles to reforming the tri-party repurchase agreement (repo) market.  Subcommittee Chairman Reed (D-RI) supported recommendations from the FSOC’s annual report (see Client Report FSOC7) advocating a faster timeline and suggesting repos be regulated as a utility.  FRB Deputy Director Matthew Eichner expressed concerns about intraday liquidity stress and fire sales and agreed that utility designation may be appropriate depending on the pace of current change to the settlement system.  Rejecting these concerns, industry witnesses highlighted progress to date to reduce reliance on intraday credit and improve collateral quality, and noted that the timeline for some reforms has been accelerated to 2014 from 2016.  This report assesses today’s hearing in detail and its likely impact on the tri-party repo market.

The full report is available to retainer clients.  To find out how you can sign up for the service, click here