« Recommendation 8: Regulation of secured funding markets, in particular repos (repurchase agreements) and securities lending should be assessed carefully and further enhanced from the prudential perspective as necessary.
The secured funding markets, in particular repos (repurchase agreements) and securities lending, were at the heart of the development of shadow banking activities prior to the crisis by (i) facilitating the use of securitisation products in financial transactions as a source of collateral for funding; (ii) providing a source of apparently low-risk, short-term secured funding for dealers and shadow banking entities; (iii) leading to increased interconnectedness in the financial systems through chains of back-to-back transactions; and (iv) through reinvestment of cash collateral from securities lending, providing a significant source of lending to term money markets involving significant maturity transformation. The use of repos and securities lending by financial institutions facilitated the maturity/liquidity transformation and build-up of leverage within shadow banking entities as well as in the system more broadly. [...] »
Extrait de Shadow Banking: Strengthening Oversight and Regulation, recommandations publiées le 27 octobre 2011 par le Financial Stability Board.
