Richard Berner, Director of the US Treasury'​s Office of Financial Research, published a paper, "Demystifying US Repo and Securities Lending Markets." Berner writes, "The Office of Financial Research released a working paper today intended to serve as a reference guide for the U.​S. repurchase agreement, or repo, and securities lending markets. The first such comprehensive reference to these securities financing transactions, it is critically needed. The OFR working paper, "Reference Guide to U.​S. Repo and Securities Lending Markets," authored jointly with staff from the Federal Reserve Bank of New York, gives an overview of the repo and securities lending markets, including the institutional structure, role and motivation of market participants, vulnerabilities and potential systemic risks, and recent efforts to limit those risks. The paper also provides an overview of existing data sources, highlighting specific shortcomings related to data standards and data quality, and steps regulators are taking to improve data coverage." He explains, "The repo and securities lending markets are important sources of short-​term funding for financial companies that need to finance securities, such as broker-​dealers and hedge funds. During the financial crisis, both experienced and transmitted distress. Despite significant improvements since the crisis in oversight and data, both markets remain opaque to regulators and market participants. And the participants in both markets are changing as traditional business models evolve and some activities migrate to new corners of the financial system. The OFR, in collaboration with other agencies, is expanding our research and data collections to demystify these markets and promote a better understanding of how they might behave when stressed again. Repos allow firms to sell securities to each other while promising to buy those securities back at a later date at a specified price. Securities lending involves a short-​term loan of stocks or bonds in exchange for cash or noncash collateral. Both markets came under pressure during the financial crisis.... Estimates for the size of the repo market at its pre-​crisis peak range widely, from $​5 to $​10 trillion. OFR researchers estimate the market is now about $​3.​4 trillion in repos (​in which dealers sell securities and receive cash) and $​2.​4 trillion in reverse repos (​in which dealers deliver cash and receive securities). The authors of the paper do not attempt to size securities lending because no comprehensive regulatory data collection covering this activity is currently available. Instead, market participants and policymakers rely on market surveys and data collections conducted by data vendors."

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