A retirement operation (repo) is a two-legged operation that is similar to a secured loan. A cash borrower sells securities (the collateral) to the lender and agrees to redeem them later at a predetermined price.2 Typical cash borrowers are asset managers, pension funds and insurance. Typical funders are money market funds and corporate treasurers. Deposits are provided by large brokers, who are themselves major users of repo to finance marketing inventory, obtain short-term financing or invest cash. In addition, several facilities have been set up by the RBI to improve liquidity in the system through the Liquidity Adjustment Facility (LAF), which covers repurchase agreements, reverse-pension agreements, marginal management facilities (FSMs), assignment contracts, etc. The Eurosystem has five types of financial instruments for its open market operations. The most important instrument is the reverse transaction, which can take the form of a retirement transaction or a secured loan. The Eurosystem may also have effects on outright operations, bond issuance, foreign exchange swaps and the recovery of term deposits. During last month`s biennial monetary policy review, the RBI had from the two weeks from the 15th The repurchase agreements (rest) with a total duration of ₹1 trillion at the policy repo rate were announced. It is understood that the TLTRO is intended to restore liquidity in the financial system. Only banks can offer LTRO auctions and benefit from RBI funds. However, let`s see how a NBFC would get cash out of it.

A market with an effective pricing mechanism is one that adapts smoothly and quickly to the underlying fundamentals. In a short-term refinancing market, this translates into a low dispersion of interest rates over time and across safety segments (spreads). We calculate three measures for price efficiency. The first is the realized volatility of the repo set (see box) in agreement with Krishnamurthy and Duffie (2016), which records the variability of rates in the temporal dimension. The other two attempted to idea that, in an efficient repo market, refinancing rates against different collateral should be closely linked. However, if a given security is in high demand, cash lenders may accept a lower interest rate for the corresponding P-repo than for a GC repo (where they don`t know what collateral they will receive). We charge a special repo premium as the difference between the SC and GC repo rates of the same safety segment (Duffie (1996)). This premium should normally be negative and its amount should reflect the importance of the shortage of guarantees. .

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