BROWSE

General Collateral Financing Trades (GCF)

What is 'General Collateral Financing Trades - GCF'

A type of repurchase agreement which is executed without the designation of specific securities as collateral until near the end of the trading day. General collateral financing (GCF) trades utilize several Inter-Dealer Brokers, who act as intermediaries for the GCF trades. GCF trades allow both borrowers and lenders in the repo market to reduce their costs and decrease the complexity of handling securities and fund transfers for repo agreements.

Explaining 'General Collateral Financing Trades - GCF'

The delay granted in specifying the exact collateral for the repo is advantageous for borrowers, who are then able to utilize the securities they have on hand to clear other, unrelated trades as necessary throughout the day. This avoids the time-consuming process of swapping collateral if it becomes needed by the borrower. GCF trades are also advantageous in that the use of the Inter-Dealer Broker allows borrowers and lenders to net out all of their GCF repo obligations at the end of each trading day, greatly decreasing the number of costly securities and fund transfers that must take place.


Further Reading


The repurchase agreement refined: GCF repo
papers.ssrn.com [PDF]
… Dealer A Mutual fund Treasury notes … These payments protect the financial interests of both borrowers … “General Collateral Financing.” Paper presented at the Bond Market Association Fixed-Income Securities Operations Conference, November 8. Cited in Dow Jones Newswire …

Introduction <span style=[to A Primer on the GCF Repo® Service]' src='/thumbnails/?img=https%3A%2F%2Fpapers.ssrn.com%2Fsol3%2Fpapers.cfm%3Fabstract_id%3D2886331' />Introduction [to A Primer on the GCF Repo® Service]
papers.ssrn.com [[to A Primer on the GCF Repo® Service]' href='https:/api.miniature.io/pdf?url=papers.ssrn.com%2Fsol3%2Fpapers.cfm%3Fabstract_id%3D2886331'>PDF]
… Dealer A Mutual fund Treasury notes … These payments protect the financial interests of both borrowers … “General Collateral Financing.” Paper presented at the Bond Market Association Fixed-Income Securities Operations Conference, November 8. Cited in Dow Jones Newswire …

The financial plumbing of the GCF Repo® ServiceThe financial plumbing of the GCF Repo® Service
papers.ssrn.com [PDF]
… Dealer A Mutual fund Treasury notes … These payments protect the financial interests of both borrowers … “General Collateral Financing.” Paper presented at the Bond Market Association Fixed-Income Securities Operations Conference, November 8. Cited in Dow Jones Newswire …

Method and apparatus for gcf repo index instrumentMethod and apparatus for gcf repo index instrument
patents.google.com [PDF]
… Dealer A Mutual fund Treasury notes … These payments protect the financial interests of both borrowers … “General Collateral Financing.” Paper presented at the Bond Market Association Fixed-Income Securities Operations Conference, November 8. Cited in Dow Jones Newswire …

Repurchase agreements with negative interest ratesRepurchase agreements with negative interest rates
papers.ssrn.com [PDF]
… Dealer A Mutual fund Treasury notes … These payments protect the financial interests of both borrowers … “General Collateral Financing.” Paper presented at the Bond Market Association Fixed-Income Securities Operations Conference, November 8. Cited in Dow Jones Newswire …

What's Up with GCF Repo®?What's Up with GCF Repo®?
ideas.repec.org [PDF]
… Dealer A Mutual fund Treasury notes … These payments protect the financial interests of both borrowers … “General Collateral Financing.” Paper presented at the Bond Market Association Fixed-Income Securities Operations Conference, November 8. Cited in Dow Jones Newswire …

Understanding the Interbank GCF Repo® MarketUnderstanding the Interbank GCF Repo® Market
ideas.repec.org [PDF]
… Dealer A Mutual fund Treasury notes … These payments protect the financial interests of both borrowers … “General Collateral Financing.” Paper presented at the Bond Market Association Fixed-Income Securities Operations Conference, November 8. Cited in Dow Jones Newswire …

Collateral values by asset class: Evidence from primary securities dealersCollateral values by asset class: Evidence from primary securities dealers
academic.oup.com [PDF]
… Dealer A Mutual fund Treasury notes … These payments protect the financial interests of both borrowers … “General Collateral Financing.” Paper presented at the Bond Market Association Fixed-Income Securities Operations Conference, November 8. Cited in Dow Jones Newswire …



Q&A About General Collateral Financing Trades (GCF)


What is a GCF trade?

A GCF trade is a repurchase agreement that does not designate specific securities as collateral.

How do borrowers benefit from the use of GCF trades?

Borrowers are able to utilize the securities they have on hand to clear other, unrelated trades as necessary throughout the day. This avoids the time-consuming process of swapping collateral if it becomes needed by the borrower.

What can Inter-Dealer Brokers do for borrowers and lenders in regards to GCF trades?

The Inter-Dealer Broker acts as an intermediary for both parties involved in a GCF trade. They help facilitate transactions between borrowers and lenders, allowing them to reduce costs and decrease complexity when conducting these transactions.

How do lenders benefit from using GCF trades?

Lenders are able to net out all of their GCF repo obligations at the end of each trading day, greatly decreasing the number of costly securities and fund transfers that must take place.