Tri-party Repo platform - Fed involvement
Hi Joseph, I was watching your interview with George Gammon and found it a very good session.
I had a question on when you mentioned that the Fed conducts monetary policy and repo on the tri-party platform. Is it using the GCF segment or the non-cleared traditional tri-party arrangement?
I was reading here: https://www.newyorkfed.org/aboutthefed/fedpoint/fed04.html
which seemed to suggest that reverse repos are done DVP, i.e. bilaterally (cleared or not cleared?). Any thoughts on that?
Is it only when Fed is lender in a repo that it goes through the tri-party platform and that reverse repo is bilateral and thus Fed is important player in all segments of repo market?
There are four segments in the repo market - tri-party, GCF (tri-party settled, FICC cleared), DVP FICC (bilateral settled, FICC cleared), DVP uncleared (bilateral settled, uncleared).
Fed operates only in the tri-party platform, which is essentially a service that helps cash providers lend without having to manage all the back office stuff. MMFs and primary dealers all have access to the tri-party platform, and the Fed operates both RRP and RP on it.
Thanks, and to confirm, Fed only operates in traditional tri-party, implying not GCF or central clearing through FICC?