Following the financial crisis, a number of regulatory initiatives were introduced designed to reduce leverage in the financial sector. These included:

The report notes that these efforts have, to a degree, been successful as dependence on repo financing was down to 13% of total liabilities for US securities dealers and banks after first quarter 2015, compared to 32% at its peak in 2007. While these numbers are encouraging, repo activity has nevertheless increased as a source of financing for foreign banks operating within the US by over 20% since 2008. In response, the Federal Reserve will expand Regulation YY in 2016. This will require foreign banks with $50 billion or more in US non-branch/agency assets to be placed into US subsidiaries within a US holding company. That holding company will be subject to the same standards as US banks.

Weaknesses in the repo market's infrastructure, particularly with regard to tri-party arrangements, were exposed during the financial crisis. Settlement of these repo contracts was dependent on two major clearing banks supplying intra-day credit to securities dealers. This meant that if a dealer failed during the day, the clearing bank ran the risk of oversized losses if the market value of the collateral provided to the dealer was insufficient to cover the clearing bank's loss on the transaction.

In repose to this, the FRBNY established the Triparty Repo Infrastructure Task Force to help clearing banks redesign their settlement procedures in hopes of reducing the risk of discretionary intra-day credit exposure. According to the report, this effort has been widely successful. By the end of 2014, both clearing banks had reduced their extension of intra-day credit to less than 10% of their daily tri-party repo volumes (down from 100% of daily volumes in 2012).

Asset file sales can contribute to systematic risk in two ways:

The paper notes that the first type of fire sale has already been met with more market regulations encouraging firms to reduce their reliance on short-term repo funding (as discussed above). While little progress has been made on regulation impacting repo "fire sales," there have been several proposals designed to address these concerns. These include:

While no official data exists, the paper notes considerable incidental evidence that the overwhelming majority of securities lenders require agents to provide borrowers with some degree of default indemnification. This is usually limited to the loss that would occur if the value of the collateral is insufficient to provide for the acquisition of replacement securities in the event the borrower fails to return the borrowed securities. Typically, securities lending is facilitated by a third party, a securities lending agent. Securities lending agents act as intermediaries between securities lenders and securities borrowers. While the paper's survey of the market noted that lending agents typically do not indemnify against potential losses from cash collateral reinvestment, it did note that a number of lending agents provide indemnification of the principal in repo investments.

Post-crisis standards found in Dodd-Frank and Basel III require bank lending agents to account for more factors when accounting for risk, such as liquidity requirements and counterparty concentration limits. But these increase the cost of securities lending for banks and may push certain institutions out of the market.

Unlike in many other countries, US securities lending often uses cash collateral, and principal losses in cash collateral reinvestment programs were a major component of the financial crisis. In the wake of the financial crisis the paper notes revisions undertaken by many securities lenders including:

Repo market data collection is based on two separate approaches. The first type focuses on a given set of market participants (such as commercial banks) while the second looks at a specific set or segment of the repo market (such as tri-party arrangements). The paper notes that significant gaps exist in the repo market data collection system to provide a complete picture of the US market. For example, while a wealth of data exists on tri-party repos, analogous data is not available for bilateral contracts. Additionally, various collection systems usually do not include information on haircuts or counterparty exposure and often double-count trades by primary dealers (the same trade is often counted as both a repo and reverse repo by a participating dealer).

Similarly, significant gaps exist in securities lending data. The paper notes that gaps exists between types of reporting entities. While pension funds remain the largest securities lenders, annual reports filled by administrators to the Department of Labor do not require detailed information on repos or securities lending (Form 5500 and Form 5500-SF), while sovereign wealth funds (SWFs), which also engage in securities lending, do not provide any regulatory filings and often prevent their agents from disclosing information.

To address these gaps, the paper endorses proposed SEC Form N-PORT as a substantial improvement to the securities lending industry. The form would, among other things, require detailed information about securities lending, repos and reverse reposes from these and other parties and would require investment companies to report the Legal Entity Identifiers (LEI) for their counterparties in such arrangements.