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The best way to manage Repos

In the 'Investing in Repos' session at the ACT's Cash Management conference last week, Repos were described as maximising the return from an under utilized asset. Repos typically need to be £10m or more in either USD or GBP.

If you are a large corporate with the resources to process the documentation and the other work involved, then they make sense as Michal Kawaski form Gazprom explained. The key benefit is the much greater likelihood of return of collateral. He also explained how they are becoming easier to process now trading platforms like MyTreasury are accepting Repos.

What was crystal clear from this session was that it is much easier to use tri-party trading for Repos rather than bilateral. As the following slides from BNY Mellon's Alan Hutchins show.

Global tri-party transaction flow

Source & Copyright©2013 - BNY Mellon

Collateral Management: Repo Bilateral v. Tri-party

Source & Copyright©2013 - BNY Mellon

There are four tri-party providers: BNYMellon, J.P. Morgan, euroclear and clear stream.

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