BNY Mellon’s monopoly in repo-clearing has concentrated economic risk, US says

21 December 2018 1:23pm
Bank of New York Mellon’s year-long monopoly in clearing short-term wholesale borrowing by dealers has concentrated US financial-stability risk in this key market, the top financial regulators said.

The Treasury-led US Financial Stability Oversight Council called for close monitoring of the tri-party repurchase agreement sector for exposure to fire sales, liquidity squeezes and cyber breaches.

“Even a temporary service disruption, such as an operational failure, could impair the market, as participants may not have a ready alternative platform to clear and settle these transactions,” the council said in its annual report yesterday.