Hedge funds warn BoE repo reforms risk liquidity
A hedge fund industry group warned the Bank of England that proposed repo market reforms could reduce liquidity and increase volatility during market stress. The group urged the central bank to monitor US clearing changes first.
Alternative Investment Management Association warned the Bank of England that short-term repo loan reforms could backfire and reduce liquidity during market stress. The warning targets proposed central clearing rules for government bonds in the United Kingdom. Net borrowing in the gilt repo market totals £200 billion, with hedge funds accounting for £85 billion.
