- creates market liquidity and price transparency for U.S. government and corporate securities that foster stable financing costs for U.S. companies and the U.S. government,
- is interconnected with other payment clearing and settlement services that are central to U.S. financial markets and are operated by the two tri-party agent banks, and
- serves as a critical source of funding for systemically important broker-dealers that make markets in U.S. government and corporate obligations.
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Tri-Party Repo Infrastructure ReformA stable and well-functioning tri-party repo market is critical to the health and stability of the U.S. financial markets and the U.S. economy for several reasons. The tri-party repo market
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November 7, 2011Related New York Fed ContentRelated External ContentContactsMarkets Group
Susan McLaughlin
susan.mclaughlin@ny.frb.org
(212) 720-1321Key Events2014May: Bank of New York Mellon implements technology changes that further reduce the extension of intraday credit to dealers to facilitate tri-party repo settlement. Bank of New York Mellon and J.P. Morgan Chase have now reduced the extension of intraday credit to dealers to less than 10% of the entire tri-party repo book.March: J.P. Morgan Chase meets the intraday risk reduction goal for all non-GCF tri-party repo transactions and transitions clients to capped committed credit.2013November: Bank of New York Mellon stops providing intraday credit to facilitate the settlement of non-maturing trades and rolled trades (those renewed with same counterparty and collateral).June: J.P. Morgan Chase stops providing intraday credit to facilitate the settlement of rolled trades (those renewed with same counterparty, collateral, and value).February: Bank of New York Mellon stops providing intraday credit to facilitate the settlement of repos backed by non-government securities.2012November: J.P. Morgan Chase introduces collateral optimization functionality that allows it to stop providing intraday credit to manage the settlement of non-maturing trades.2011October: J.P. Morgan Chase and Bank of New York Mellon implement the three-way trade matching process recommended by the industry Task Force.August: J.P. Morgan Chase and Bank of New York Mellon implement the industry Task Force’s recommendation to move the start of tri-party repo settlement from 8:30 am to 3:30 pm.June: J.P. Morgan Chase and Bank of New York Mellon implement the industry Task Force’s recommendation to establish automated collateral substitution capability.2010May: The industry Task Force issues a report recommending ways in which the tri-party repo settlement process should be reengineered to reduce the market's reliance on intraday credit provided by clearing banks.
The New York Fed issues a white paper articulating the need for tri-party repo infrastructure reform and articulating the attributes that a new settlement process must have to be resilient to stress. 2009September: The Tri-Party Repo Infrastructure Reform Task Force is established with industry membership.2007-2008Weaknesses in the tri-party repo market surfaced during the financial crisis. - Economic
