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The classic bank run occurred when depositors became nervous about the solvency of a bank and raced to withdraw their money, which prompted other depositors to take similar action. In recent years, dealer banks have experienced new forms of bank runs which have quickly eroded their liquidity position and ultimately caused their failure. Which of the following describes a key mechanism which leads to the failure of a dealer bank in this modern version of bank run?
A
A large group of a dealer bank's repo creditors simultaneously renew their positions.
B
Many of a dealer bank's prime brokerage clients sell securities in order to increase their cash balance.
C
A significant portion of a dealer bank's over-the-counter derivatives counterparties reduce their exposure to the dealer.
D
The clearing bank of a dealer bank continues making cash payments to the dealer.