Repo, re-use and re-hypothecation

In the regulatory debate about shadow banking, and in particular repo, there has been much confusion about the legal terminology of collateral, some of it threatening to have substantive policy consequences. This blog is a basic primer on the difference between ‘re-use’ and ‘re-hypothecation’ of collateral. Outside the US, a repo works by means of…

How good a picture can Euro GC Pooling provide of the interbank euro GC repo market?

An interesting academic paper has recently suggested that Eurex Repo’s Euro GC Pooling (EGCP) system ‘allows us to comprehensively investigate the bilateral CCP-based part of the interbank segment of the euro GC repo market’ and makes it possible to ‘accurately document and analyse developments in the bilateral CCP-based interbank repo market’.[1] This is of topical…

How much does repo encumber collateral?

The issue The encumbrance of banks’ assets has become an issue of growing concern to regulators. Banks have increasingly resorted to secured funding in the wake of the financial crisis and as unsecured funding has become more expensive and generally scarce, while investors have increasingly preferred secured assets in order to mitigate heightened counterparty credit…

How do you solve a problem like the banks?

Professor Brian Scott-Quinn, non-executive Chairman of the ICMA Centre, the business school for financial markets, outlines the main findings of the Independent Commission on Banking, which reported on Monday 12 September. The Commission, chaired by Sir John Vickers, was established by the Chancellor of the Exchequer in June 2010 to recommend changes to the UK…

Rebuilding society post-recession

What next? Financial crises This is a copy of Professor Brian Scott-Quinn’s article published in the Summer Issue of the University of Reading’s Research Review Professor Brian Scott-Quinn, the chairman of the ICMA centre for financial markets at Henley Business School, discusses financial crises and whether regulatory capture is to blame. The crisis in the…