ICMA today released two documents on the repo market. The first was an analysis of proposed CSDR mandatory buy-in rules. This is a highly contentious issue and the ICMA is justifiably concerned about the impact on bond and repo liquidity, costs and the potential to reshape the repo market. The second was the biannual European repo survey, which showed the beginnings of the Leverage Ratio’s impact on repo volumes.
Zoltan Pozsar’s recent paper on the macro view of Shadow Banking pointed out an important connection in financial markets – that the Bank of England is now the global backstop for liquidity in Eurodollar transactions. This is a massive change in the functioning and perception of offshore US dollar markets. Here are the details.