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New York Fed Says Repo Fire Sale Risks Not Being Addressed

The Federal Reserve Bank of New York said risks of rapid asset sales in the repurchase agreement market aren’t being adequately curbed, and regulators may need to step in to shore up such wholesale funding.

The potential for fire sales, or forced selling of securities used as collateral in the $1.6-trillion-a-day tri-party repo market in case of a large default, “is not currently being addressed by industry participants,” the New York Fed said in a note posted on its website today.