Surging gross repo costs highlight US dealers’ divergence on netting
Lack of offsetting in GAAP presentation leads BNY and Northern Trust to report paying double- or triple-digit rates on fed funds, repos
BNY and Northern Trust reported paying 117% and 59%, respectively, in annualised interest on federal funds and repos before netting in Q4 2024 – an accounting-induced distortion that nevertheless suggests a different approach to netting compared to other dealers.
Accessing the overnight interbank markets had cost the custodians virtually nothing until Q4 2021, as the US Federal Reserve held the
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