LeoGlossary: Tri-Party Repo

Repurchase agreement in which a third party is responsible for the management of the collateral during the life of the transaction. This can be a:

In Europe, tri-party agreements are handled by:

  • Clearstream Bank Luxembourg
  • Euroclear Bank
  • Bank of New York Mellon
  • JP Morgan
  • SIS

In the United States, Bank of New York Mellon is the single clearing bank. JP Morgan was a clearing bank but ceased serving this function in 2018.

Because collateral is typically selected automatically by the tri-party agent, tri-party repo cannot be used for borrowing and lending specific securities. It is a pure General Collateral (GC) funding facility. This is reflected in the large average deal size of tri-party repo and collateralization by multiple securities.


Function of Tri-Party Agent

  • Calculation of collateral requirements and transmission of margin calls
  • Verification of collateral eligibility as margin
  • Processing the delivery of collateral to a trade counterparty
  • Receipt of pledged collateral and placement in a segregated account
  • Ongoing monitoring for collateral sufficiency, including daily mark-to-market
  • Collateral substitution
  • Reporting to both parties to the trade
  • At the maturation or termination of the trade, return of collateral

Tri-Party Repo Market Volume - New York Federal Reserve

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