FT Alphaville writes "Dealers loosen their grip on money markets (​a little bit)." The odd update explains on "Money market funds" (​apparently in relation to the FICC), "Now they can purchase collateral from (​or lend cash into) the centrally cleared pools for general collateral financing repurchase agreements -- known as GCF repo -- that were previously dominated by dealers. They had lent $​16bn of cash into that pool at the end of September, up from nothing at the start of the year, according to the Office of Financial Research'​s money market fund monitor. Now, money-​market funds don'​t get the full benefits of GCF repo, since the funds are currently only permitted to purchase collateral/​lend cash. (​GCF transactions are backed by high-​quality securities, so dealers end up lending out Treasuries or agencies they have on hand at the end of the day, within an agreed-​upon range of quality.) But they can earn a slightly higher return on cash than they'​d get at the Fed, without the need to pay a dealer intermediary.... And because GCF repo is centrally cleared and usually collateralised by Treasuries, the transactions are generally safe as well." The piece adds, "Money-​market funds' expansion into GCF repo was made possible by a rule change from the Depository Trust & Clearing Corp earlier this year. While investment funds could lobby for dealer-​sponsored access to the clearing platform before the rule change, that required the cooperation. In short, it required dealers to voluntarily give up their privileged access to a safe source of returns on cash (​or sometimes, collateral). That'​s a tough sell, even after regulations made it more expensive for dealers to intermediate these transactions on behalf of their clients."

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