"Primary dealers ask Fed for breakable repos" writes Reuters. The article says, "Since the Fed began testing reverse repos with primary dealers this fall, a handful of the 18 banks that help the central bank carry out its open market operations have recently suggested that so-called reverse repurchase agreements should be 'breakable.' Barclays, for one, told the Fed the tool would be more effective if money market funds had the option to quickly unwind these agreements -- in which assets are temporarily transferred from the Fed to market participants in exchange for cash -- in an emergency. Money market funds, flush with cash, are a logical addition to the primary dealers as potential reverse repo counterparties for the Fed, capital markets professionals say. Money market funds could either conduct the repos through primary dealers or forge the agreements directly with the Fed." Reuters quotes Barclays Capital's Joe Abate, "We had recommended breakable repos in the context of repos being expanded to include money market funds. We felt this was an important safeguard in the event money funds face significant redemptions in the future and need to be able to exit a repo transaction and get their cash back."
