The New York Times reported in September 2019 that it was estimated that a trillion dollars of guarantees per day were deployed in U.S. pension markets. [1] The Federal Reserve Bank of New York declares the daily collateral volume of renuating for different types of repurchase agreements. On 24.10.2019, the volume was the overnight guaranteed cash rate (SOFR) of USD 1.086 billion; General collateral rate (BGCR) $453 billion and $425 billion (General Collateral Rate) (TGCR). [2] However, these figures are not additive, the latter two being only elements of the first SOFR. [11] How many cash portfolios are available for use in RRP operations? The FOMC instructed the Desk to conduct, overnight, RRP (ON RRP) transactions in amounts limited only by the value of the cash securities held at the soma, which are available for such transactions. To determine this value, the desk takes into account several factors, as not all cash securities held in the SOMA are available for such transactions. First, some of the treasury bills held in the SOMA are required to carry out reverse retirement transactions with foreign official and international accounts. Second, some treasury bills are required to support the desk`s securities lending operations. If the desk were to perform RRPs, cash securities as collateral for unpaid RRP maturities would not be available as collateral for ON RRP operations.

The buy-back contract, or “repo,” the market is an opaque but important part of the financial system, which has recently attracted increasing attention. On average, $2 trillion to $4 trillion in pension transactions are traded every day — guaranteed short-term loans. But how does the pension market work, and what about it? There are mechanisms built into the possibility of buyback agreements to reduce this risk. For example, many depots are over-secure. In many cases, a margin call may take effect to ask the borrower to change the securities offered when the security loses value. In situations where the value of the guarantee is likely to increase and the creditor cannot resell it to the borrower, subsecured protection can be used to reduce risk. Rests are popular because they are simple and safe. Financial institutions such as banks, securities dealers and hedge funds do not have large amounts of cash available.

They prefer to put all their money into work. If they need money in a hurry, they can turn to the pension market. On the other hand, money funds have a lot of money. They are happy to lend money to the financial institution overnight for a small fee. In general, the credit risk associated with pension transactions depends on many factors, including the terms of the transaction, the liquidity of the security, the specifics of the counterparties concerned and much more.

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