Discussion Paper
Follow the Cash! Microstructure of Repo Markets
Abstract: The repo market in the U.S. is a mosaic of segments with distinct participants and various settlement and clearing practices. Why do large cash lenders typically settle their trades through a third-party agent? Why does the interdealer market clear through a central counterparty? Why do levered investors favor bilateral trades? In the second post of this series, we follow the cash as it navigates through repo markets to better understand the costs and benefits that shape the existing market structures.
JEL Classification: E52; G1; G21; G23;
https://doi.org/10.59576/lse.20260929
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https://libertystreeteconomics.newyorkfed.org/2026/09/follow-the-cash-microstructure-of-repo-markets/
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Bibliographic Information
Provider: Federal Reserve Bank of New York
Part of Series: Liberty Street Economics
Publication Date: 2026-09-29
Number: 20260929