tri-party repo market

The tri-party repo market is a financial system where one party borrows money and another lends it using securities, like government bonds, as collateral. It involves three main participants: the borrower, the lender, and a third party, usually a clearing bank, that facilitates the transaction and manages the collateral. This setup ensures that both the borrower and lender have reduced risk, as the clearing bank oversees the exchange and can quickly sell the collateral if the borrower defaults. This market plays a crucial role in providing short-term funding and liquidity to financial institutions.