The $12 Trillion US Repo Market: Evidence from a Novel Panel of Intermediaries
Sam Hempel, R. Jay Kahn, and Julia Shephard1
Our analysis reveals that the gross size of the U.S. repo market reached $11.9 trillion in 2024, significantly above estimates in previous studies. Roughly 38% of that figure ($4.6 trillion) arises from the less transparent non-centrally cleared bilateral repo (NCCBR) segment. Previous estimates have understated the scale of the repo market because they have been derived, either directly or indirectly, from data on a subset of large participants such as primary dealers or global systemically important banks (G-SIBs). Our estimate is based on data on the universe of SEC-registered securities dealers and complemented by additional data on bank balance sheets.
A key insight from our data is the extent to which dealers predominantly serve as intermediaries between cash borrowers—often hedge funds seeking leverage—and cash providers—such as money market funds, looking for short-term, collateralized investments. Instead of simply borrowing funds to finance their own securities inventories, we find that large consolidated dealer-banks operate matched books, with nearly offsetting repo and reverse repo positions on a consolidated basis. We find no evidence for the hypothesis that these matched books are intended primarily to net repo to avoid costs of the Supplementary Leverage Ratio (SLR), since there is no significant difference in matched books between dealers subject to the SLR and those that are not. The intermediation role played by dealers means that shifts in hedge-fund borrowing or money market fund lending drive the lions’ share of fluctuations in dealer repo activity, underscoring the market’s function as a conduit rather than merely a funding mechanism for dealer inventories. In particular, changes in net repo borrowing by hedge funds, a measure closely associated with the cash-futures basis trade, appears to account for a substantial portion of the variation in gross dealer positions, underscoring the importance of this trade for overall repo volumes.
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