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Tri-party repo reforms pose new challenges
The collapse of Lehman Brothers caused regulators to focus on the systemic risk posed by the trillion-dollar tri-party repo market. An industry task force is making wholesale changes to the way the market works, but this is creating new challenges. Mark Pengelly reports
![Steven Misischia Steven Misischia](/sites/default/files/styles/landscape_750_463/public/import/IMG/615/170615/steven-misischia-580x358.jpg.webp?itok=tew5Ve0n)
It all sounds very simple: one party borrows cash from another in return for collateral, with a big, strong clearing bank standing between the two. It is a practice that has existed in the US for decades, and dealers have come to rely on the tri-party repo market as a critical source of funding. But it also represents a huge risk to the financial system – a fact that was quickly recognised after the collapse of Lehman Brothers in 2008. Regulators and banks have been working since then to reduce
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