A Study On The Transaction Mechanism Of The U.S.Tri-Party Repo Market

Repurchase market is an important and basic part of the financial market.It is a low-cost and stable short-term financing market.The repurchase market mainly includes two sub-markets,the two-party repurchase market and the three-party repurchase market,in which the three-party repurchase market is the focus.As the third-party intermediary acts as the agent of collateral management and settlement,the tripartite repurchase market has the characteristics of strong professionalism,high security and mature mode,so it has been developed rapidly,which reduces the cost of repurchase transaction and improves the efficiency of repurchase transaction.Tripartite repurchase transactions in the United States began in the 1970s.Solomon Brothers securities brokers and Hanhua Industrial Bank,the national debt clearing bank,jointly developed on the basis of bilateral repurchase.As an important financial market in the world,tripartite repurchase in the United States provides huge funds for securities dealers and secondary market liquidity for securities such as Treasury bonds.Therefore,tripartite repurchase market in the United States has attracted wide attention from academia.Since 2018,China has gradually introduced a tripartite Repurchase Trading method.On the evening of April 24,2018,the Shanghai Stock Exchange issued the Interim Measures for Bond Pledge Tripartite Repurchase Trading and Settlement of China Securities Registration and Settlement Co.,Ltd.on the Shanghai Stock Exchange.In October,2018,the People's Bank of China issued Document No.18,announcing the formal launch of tripartite repurchase business in the interbank bond market.The tripartite repurchase transaction meets the need of fine management of repurchase collateral,improves transaction efficiency,reduces transaction risk and cost,strengthens risk prevention and control of repurchase market,and has a positive market response.In order to better construct China's tripartite repurchase transactions,the study of the US tripartite repurchase market trading mechanism can provide us with a good reference.This paper takes the transaction mechanism of American tripartite repurchase market as the research object,and carries on the analysis from three aspects.Firstly,this paper summarizes the transaction mechanism of the tripartite repurchase market in the United States,and introduces the origin,characteristics,main participants and operation process of the market.Secondly,it analyses the inherent defects of the transaction mechanism of the tripartite repurchase market in the United States,which may induce systemic financial risks and destroy the stability of the financial market under the financial shocks.Under the impact of Lehman Brothers'bankruptcy,the discount rate,types and shares of collateral in the tripartite repurchase market in the United States have changed,resulting in a continuous decrease in the financing volume of the tripartite repurchase market.To support the above view.Thirdly,it analyses the reforms of the three-party repurchase market trading mechanism carried out by American regulators,such as reducing intra-day credit of clearing banks,no daily closing of unwanted repurchase transactions,optimizing the types of mortgages and their valuation methods,and improving the process of collateral liquidation and distribution transactions.Finally,on the basis of summarizing the development and reform of the tripartite repurchase market transaction mechanism in the United States,this paper puts forward five enlightenments for the tripartite repurchase transaction in China's interbank bond market,including strengthening the prevention of financial risks,establishing emergency plans,strengthening the capital adequacy ratio requirements of liquidation banks,reducing the size of the liquidation bank's daily liquidation mechanism,and improving the transparency of the tripartite market repurchase process.Reduce leverage of financial institutions.