Responding to Quincy, Colombo said: ’ The quality of collateral as well as short seller’s positions affect the repo rate’ Is Colombo right? (a) yes (b) no only w.r.t quality is correct © no only w.r.t short sellers’ positions is correct
A?
Quality - no SSPs - yes, because if there’s a squeeze and you’re holding the collateral, you can get a discount
Lol, sorry…answer is “C”. Thought it was an essay question 
My guess is yeah, but the conclusion is sort of a stretch. I guess its assuming the dealer needs to locate a lot of the security, more than they can find through securities lending, and have to find through repo. Then they would offer a lower yield to repo that security to lend to shorts? The other is correct.
A 1 the higher the quality of coll the lower the repo rate 2. the more the stock is shorted the more it is desirable as a coll and the lower the repo rate
wait a min are u guys saying the quality of the repo rate doesnt matter a la bear sterns?
It seems as though I’m in the minority here…hmmmmmm.
^^^^^hey easy with the black jokes man
Grrrrrrrr…how the fuck could I miss this? I gotta stop drinking…
skillionaire Wrote: ------------------------------------------------------- > Grrrrrrrr…how the fuck could I > miss this? > > I gotta stop drinking… You are 3 days early buddy.
It’s A In a big loop, short sellers needs affect the supply/demand of collateral which the lender requires. So much for my acronym, which my scrabble-playing Grandmother came up with: ‘Quad-Defects’. I think of a fat repo man who’s broken the wheels off a quad bike Quality Desirability Delivery Fed Funds rate Credit quality Term Seasonal factors
Bad question… shorts in the market surely affect the repo rate, but the positions of the parties involved shouldn’t. I need to go to bed… this stuff is playing mind games with me.
This is a poorly worded question but short sellers position equates to the desirability of paper, meaning that if everyone is short and everyone needs to deliver then they need to borrow paper. Repos will go on what is called “Special” and often times you will get free money (negative repo rates). If own BP and everyone is short and it’s getting hard to deliver paper, then I will give you my BP shares and you will give me a collateralized loan based on those shares, but because everyone wants to borrow my shares, you are going to lend me $100000 lets say and I might only return $99900 when the repo is over. Totally agree with tomsimons on this, badly worded and I would have assumed that they meant the position of the parties involved. I used to trade Repos and if I cant figure out what they meant then how are they testing for knowledge?