Dheeraj Choudhary’s Post

📢 New Post Just Dropped! Curious about the ins and outs of 𝗿𝗲𝗽𝗼 𝘁𝗿𝗮𝗻𝘀𝗮𝗰𝘁𝗶𝗼𝗻𝘀? 🤔💡 My latest post provides summary of the history, key stats, and formulas that drive this essential financing tool! 💼🔍 Ideal for finance pros and enthusiasts alike. Take a look and share your thoughts! 👇✨ #Finance #RepoMarket #RiskManagement

📌 𝗥𝗲𝗽𝗼 𝗧𝗿𝗮𝗻𝘀𝗮𝗰𝘁𝗶𝗼𝗻𝘀: 𝗛𝗶𝘀𝘁𝗼𝗿𝘆, 𝗙𝗮𝗰𝘁𝘀 𝗮𝗻𝗱 𝗙𝗼𝗿𝗺𝘂𝗹𝗮 🧩 𝗪𝗵𝗮𝘁’𝘀 𝗮 𝗥𝗲𝗽𝗼? A repurchase agreement (repo) is a short-term borrowing tool where one party sells securities to another with an agreement to repurchase them later at a set price. Repo transactions have fueled liquidity in financial markets, supporting banks, hedge funds, and corporates in managing short-term funding needs. 🕰️ 𝗛𝗶𝘀𝘁𝗼𝗿𝗶𝗰𝗮𝗹 𝗖𝗼𝗻𝘁𝗲𝘅𝘁: Repos originated in the early 20th century but rose to prominence in the 1980s as financial institutions sought reliable ways to secure cash. Post-2008, repos became critical for bank funding, leading to increased regulation and standardization. Today, the global repo market is valued at over $12 trillion, underscoring its importance in liquidity management. 📊 𝗥𝗲𝗽𝗼 𝗧𝗿𝗮𝗻𝘀𝗮𝗰𝘁𝗶𝗼𝗻 𝗦𝘁𝗮𝘁𝘀: Repo markets have grown significantly, with the European market alone averaging €8 trillion in daily transactions, and the U.S. repo market reporting a daily average of $4.2 trillion (ICMA 2023). These numbers highlight the market’s scale and its impact on short-term rates. 🧮 𝗙𝗼𝗿𝗺𝘂𝗹𝗮 & 𝗞𝗲𝘆 𝗧𝗲𝗿𝗺𝘀: The value exchanged in a repo is influenced by collateral, margins, haircut, maturity, and repo rate. - The repo loan amount = Collateral Value × (1 - Haircut). - Collateral Value: Market value of the securities - Margin/Haircut: Difference between collateral and loan amount - Repo Rate: Interest rate for the borrowed amount - Maturity: Duration of the repo, from overnight to a year 𝗘𝘅𝗮𝗺𝗽𝗹𝗲: Suppose Bank A agrees to a 1-week repo with Bank B, using $1M in U.S. Treasuries (collateral) with a 2% haircut and 3% interest rate. - Loan Amount = $1M × (1 - 0.02) = $980,000 - Interest for 1 week = $980,000 × (3%/52) = $565 - Bank A receives $980,000 in cash, repaying $980,565 after one week. ⚖️ 𝗪𝗵𝘆 𝗜𝘁 𝗠𝗮𝘁𝘁𝗲𝗿𝘀: Repos are vital for liquidity and risk management, enabling financial institutions to meet regulatory requirements and maintain operational cash flow. #Repo #liquidityrisk #interestrates #treasury #finance #collateral #frm #cfa #cqf CFA Institute Global Association of Risk Professionals (GARP) CQF Institute Gabriel Brian Jonathan Nicholas Ameya Bhuvan Rachayeeta Federal Reserve Bank of New York Reserve Bank of India (RBI)

DVP (delivery versus payment) is the industry standard for securities settlement, ensuring that settlement occurs only after payment has been made. Unlike in GC markets, where BNY Mellon's platform simply assigns securities as collateral, DVP repo markets use Fedwire, the Federal Reserve's settlement system, to transfer securities between participants' accounts in CBES, the Federal Reserve's Commercial Book-Entry System. In DVP markets, participants, mostly hedge funds, request to receive a specific security, such as a newly issued Treasury bond, in their possession in the Federal Reserve's official system. Therefore, these markets are also known as specific collateral (SC) markets. Hedge funds, primarily, obtain one or more specific securities to speculate on in the short term, then use them for operations in secondary markets before closing out their repo transactions. While the FICC's DVP service processes around $1 trillion in SC repos per day, the NCCBR market handles several trillion dollars daily. These markets serve as the primary dealer-to-customer repo markets, allowing intermediaries to provide securities and cash to "advanced" repo clients, such as hedge funds and other leveraged investors, as well as some banks seeking funding. The key difference between these two markets lies in the fact that transactions in the FICC's DVP service are centrally cleared by the FICC itself, while repo volumes in NCCBR are settled without going through the accounts of a central counterparty. With finalized new rules, reducing non-centrally cleared parts of the repo, especially NCCBR and triparty, has become the top objective of monetary leaders. Most of the volume in non-centrally cleared repos finances speculative players engaging in highly leveraged trades. However, these leveraged bets not only provide vital liquidity to cash, repo, and Treasury futures markets but also bind these markets together.

Finding liquidity in today’s high dollar leveraged loan environment can prove to be difficult. Earlier this month, we hosted a webinar with leaders in the industry to discuss how they are navigating this landscape and the role that electronic trading can play in finding efficiencies. Read the summary: https://lnkd.in/eGFRvirA

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ASIC FX, Derivatives, Securities, Fund MIS, MDA License AFSL #139 For Sale   1. This licence authorises the licensee to carry on a financial services business to: (a) provide financial product advice for the following classes of financial products: (i) deposit and payment products limited to: (A) basic deposit products; (B) deposit products other than basic deposit products; (ii) derivatives; (iii) foreign exchange contracts; (iv) debentures, stocks or bonds issued or proposed to be issued by a government; (v) interests in managed investment schemes including: (A) investor directed portfolio services; (vi) interests in managed investment schemes limited to: (B) MDA services; (vii) securities; (viii) non-standard margin lending facility; and (ix) standard margin lending facility; (b) deal in a financial product by: (i) issuing, applying for, acquiring, varying or disposing of a financial product in respect of the following classes of financial products: (A) derivatives; (B) foreign exchange contracts; (C) interests in managed investment schemes including: (1) investor directed portfolio services; and (D) interests in managed investment schemes limited to: (2) MDA services; and (ii) applying for, acquiring, varying or disposing of a financial product on behalf of another person in respect of the following classes of products: (A) deposit and payment products limited to: (1) basic deposit products; (2) deposit products other than basic deposit products; (B) derivatives; (C) foreign exchange contracts; (D) debentures, stocks or bonds issued or proposed to be issued by a government; (E) interests in managed investment schemes including: (1) investor directed portfolio services; (F) interests in managed investment schemes limited to: (2) MDA services; (G) securities; (H) non-standard margin lending facility; and (I) standard margin lending facility; and (c) provide the following custodial or depository services: (i) operate custodial or depository services other than investor directed portfolio services and managed discretionary accounts to retail and wholesale clients.   1 key person, 2 RMs, RM can stay Australian bank accounts No complaints Good for overseas CFD groups For more information, please contact info@acpadvisory.com #AFSL #AFSLforsale #Australian #CFD #CFDbroker #fx #fxcontracts #derivatives #mda #mis #managedinvestmentscheme #marginlending #securities #retailclients https://lnkd.in/gXjdhe87

#SBL ,#Options and #Repos SBL, options, and repos are distinct financial tools with unique functions and mechanics. - Securities Borrowing and Lending (SBL) is essentially a short-term loan where securities are used as collateral. Borrowers obtain securities temporarily for various purposes, paying a fee for the privilege. The main risks are the potential default of the borrower (counterparty risk) and the value of the collateral (collateral risk). - Options grant the holder the right, but not the obligation, to buy or sell an underlying asset at a specific price within a set timeframe. Call options offer the right to buy, while put options provide the right to sell. These instruments are versatile for hedging, speculation, and income generation. Buyers have limited risk, but sellers face potentially unlimited losses. - Repurchase agreements (repos) are short-term financing arrangements where securities are sold with a promise to repurchase them at a higher price later. Essentially, it's a secured loan with the securities as collateral. Counterparty and interest rate risks are the primary concerns. Each of these instruments serves a specific purpose in financial markets, contributing to liquidity, risk management, and investment strategies. #Risk , #investment, #Accounting, #exchange #finance, #Operations

Finadium’s Rates & Repo North America is coming up on October 29 in New York, and we’re highlighting a few early insights as a sneak preview. In the second of a series of articles, we hear from our expert panelists from BNY, Eurex and SUNTHAY about the catalyst for change that UST repo clearing represents and what that means for players and platforms of the repo market as the industry identifies gaps and weighs strategies. John Morik, Frank Odendall, Shiv Rao  More on #finadium: https://lnkd.in/emHx4e9w

Finadium’s Rates & Repo North America is coming up on October 29 in New York, and we’re highlighting a few early insights as a sneak preview. In the second of a series of articles, we hear from our expert panelists from BNY, Eurex and SUNTHAY about the catalyst for change that UST repo clearing represents and what that means for players and platforms of the repo market as the industry identifies gaps and weighs strategies. John Morik, Frank Odendall, Shiv Rao  More on #finadium: https://lnkd.in/eDYX-j_v

My latest for Finadium: Heading to FISL on May 8/9? Read up on some of the major regulatory issues you should know about.