The December 2021 Senior Credit Officer Opinion Survey on Dealer Financing Terms collected qualitative information on changes in credit terms and conditions in securities financing and over-the-counter (OTC) derivatives markets. In addition to the core questions, the survey included a set of special questions about participation in the Fixed Income Clearing Corporation’s (FICC) sponsored repurchase agreement (repo) services. The 23 institutions participating in the survey account for almost all dealer financing of dollar-denominated securities to non-dealers and are the most active intermediaries in OTC derivatives markets. The survey was conducted between November 9, 2021, and November 22, 2021. The core questions asked about changes between September 2021 and November 2021.1
With respect to current usage of the sponsored DvP repo service, dealers reported the following:
- About three-fifths of respondents indicated that they are currently sponsoring members in the sponsored DvP repo service.
- Almost all current sponsoring members cited greater balance sheet efficiency and reduction in capital usage for sponsoring members as the most important factor supporting the usage of the sponsored DvP repo service. Increased financing availability or access to greater market liquidity for sponsored members was cited by more than three-fifths of respondents as the second most important factor, while reduction in operational risk for sponsoring members was cited as a contributing factor.
- FICC margin and liquidity requirements for sponsoring members was cited by about one-half of total respondents as the most important factor limiting the usage of the sponsored DvP repo service. The administrative burden for new repo agreements and other membership obligations and operations costs associated with central clearing were commonly cited as the second and third most important factors, respectively.
With respect to usage of the sponsored DvP repo service during March 2020, dealers reported the following:
- Approximately one-fourth of current sponsoring members reported that their institution’s sponsored DvP repo volume increased, on net, during March 2020.
- Greater balance sheet efficiency and reduction in capital usage was cited by all respondents who reported an increase as the most important factor driving the increase. Increased financing availability and counterparty diversification benefits for sponsored members were also cited as contributing factors.
- The remaining roughly three-fourths of current sponsoring members reported no change to their sponsored DvP repo volume during March 2020.
- FICC margin and liquidity requirements**,** other membership obligations and operations costs associated with central clearing**, and the** administrative burden for new repo agreements were the three most cited factors limiting sponsored repo volume.
- One-half of the respondents that reported no change indicated they had very little sponsored repo activity during March 2020.