The market for repurchase agreements, or the repo market, plays an essential role in financing investors’ US Treasury positions; influences interest rates; and, thus, has implications for all other parts of the bond, FX and equities markets.

Turmoil in the repo market in mid-September raised important questions from investors and policymakers alike about the stability and resiliency of funding markets, which remain relevant heading into another period of potential stress at year-end.

In episode 16 of The Flip Side podcast series, Jeff Meli, Head of Research, and Ajay Rajadhyaksha, Head of Macro Research, discuss the $2.4 trillion repo market and debate whether enhanced post-crisis regulation of the banking system has contributed to repo market volatility and how intervention by the US Federal Reserve may create additional risks, as well as offer their views on what the long-term solutions might be to address underlying structural issues.