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earns interest on the cash collateral. The lender under a repo
typically buys and resells the Treasury security at a small
discount from its current value.
Repos can mature overnight, they can have fixed, longer
terms, or they can have indefinite terms that continue until
terminated by either party. The interest rate charged by a repo
lender can be fixed for the term of the repo, or it can be reset
daily.
Repurchase and reverse repurchase transactions are primarily
transacted over the telephone, and primary dealers, secondary
dealers, interdealer brokers, and other market participants
engage in repos and reverse repos as principals. The Treasury
securities cash market is characterized by highly leveraged
transactions, and virtually all participants in the Treasury
securities market engage in leveraged trading to a large extent.
IV. Background of Petitioner and B&C
Petitioner has worked in the commodities and securities
industries his entire career. From 1960 to 1970, he worked as a
securities broker registered with the National Association of
Securities Dealers (NASD), the New York Stock Exchange, and the
American Stock Exchange. From 1970 to 1972, he worked with J.W.
Dickson, a Futures Commission Merchant (FCM) and a member of the
Chicago Board of Trade (CBT).8 In 1972, he began working for
8 An FCM is a designation given by the Commodity Futures
Trading Commission (CFTC) to a person who it has licensed to do
(continued...)
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