A type of repo in which a three-way agreement is entered into to facilitate settlement and daily margining. The three parties are the cash provider (the lender), cash taker (the borrower), and a custodian or clearing agent (the tri-party agent). The tri-party agent (a bank or central securities depository) acts as an intermediary between the cash borrower and lender in order to ensure that the securities posted as collateral by the borrower are of adequate value both at the initiation of a transaction and over its term. The triparty agent revalues the collateral on a daily basis and makes margin calls on either party when necessary.
Triparty repo reduces the operational and regulatory barriers to participating in the repo markets.
It is also known as a tripartite repo.
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