General collateral repos, GC repos (also in German)

Assets that can be traded at any time as collateral in repo transactions. They are settled on alternative trading platforms involving a central counterparty (CCP). The share of repo transactions executed through CCPs increased from 37 percent in 2008 to 65 percent in 2013. – General collateral or GC is the range of assets that are accepted, at any particular moment, as collateral in the repo market by the majority of market intermediaries and at a very similar repo rate — the GC repo rate. In other words, the repo market as a whole is indifferent between securities that are to be in the general collateral basket. GC assets are high quality and liquid, but none is subject to exceptional specific demand. The GC repo rate should therefore be driven purely by the supply of and demand for cash and not by the supply of and demand for individual assets. As such, the GC repo rate should be closely correlated to other money market rates. – The General Collateral Pooling Basket currently comprises around 7,500 top-rated collateral items that are accepted by the ECB. In addition, there is a GC Pooling Extended Basket. This basket contains about 25,000 collaterals of lower credit quality, which, however, also meet the ECB’s requirements. – See lendability, computer exchange, Eurex, Eurex Credit Clear, Euro General Collateral Pooling, hub, central bank eligibility. – Cf. Deutsche Bundesbank Monthly Report, December 2013, p. 67 (increase in importance of general collateral repos; overview).

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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