General collateral market

The repo market in linkers coexists alongside an old-style stocklending system. Issues seldom stray far from general collateral rates. Index-linked gilts are not strippable, and there is no index-linked futures contract. There is a sterling inflation derivatives market, which... 

This is part of the general collateral (GC) market, and is more common in the United States than elsewhere. Consider the case of a cash-rich institution investing in GC as an alternative to deposits or commercial paper. The better the quality of collateral, the lower the yield the institution can expect, while the mechanics of settlement may also affect the repo rate. The most secure procedure is to take physical possession of the collateral. However, if the dealer needs one or more substitutions during the term of the trade, the settlement costs involved may make the trade unworkable for one or both parties. Therefore, the dealer may offer to hold the securities in his own custody against the investor s cash. This is known as a hold-in-custody (HIC) repo. The advantage of this trade is that since securities do not physically move, no settlement charges are incurred. However, this carries some risk for the investor because they only have the dealer s word that their cash is indeed fully collateralised in the event of default. Thus this type of trade is sometime referred to as a Trust Me repo it is also referred to as a due-bill repo or a letter repo. 

However, the repo desk has lent 937,708 against this security, which exceeds its market value. Under a variation margin arrangement it can call margin from the counterparty in the form of general collateral... 

There is a wide variety of European securitisation transactions that are backed by one form or another of commercial property. This variety stems from the range of types of commercial property that may be included in the collateral pool, the type of borrower or borrowers, and the level of exposure to any underlying industries or sectors. As a result, it is not always clear where this sector begins or ends, and although it may be tempting to invent new subclassifications for the various fragments of the sector, this is not necessarily particularly helpful for investors or the market in general. To complicate matters further, a number... 

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