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5. Who are the main users of the repo market?
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Traditionally, the principal users of repo, on the sellers’ side of the market, have been securities market intermediaries (broker-dealers or investment banks) and leveraged investors such as hedge funds seeking funding. On the buyers’ side, the principal traditional users have been large commercial investment banks and cash-rich and often very risk-averse investors, such as central banks investing foreign currency reserves, and international financial institutions and money market mutual funds, seeking secure investments. Since the crisis, because of generally higher risk aversion and regulatory pressure, repo has reportedly been attracting smaller commercial banks, as well as a greater number of non-bank financials as such sovereign wealth funds, pension funds, insurance companies, endowments and corporate treasuries.

Most central banks rely on the repo market as the main channel for the transmission of monetary policy implementation to the wider financial market and to provide emergency assistance to the banking system.

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