Financial Risk Manager Part 2

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Explanation:

When a party wants to borrow a specific security (special collateral), they must offer cash at a "special" repo rate, which is typically lower than the general collateral (GC) repo rate. The lender of the specific security enjoys a favorable borrowing cost on cash due to the high demand for their security.

(B) is false: If the primary motivation is just to lend cash, the GC rate applies.
(C) is false: GC rates offer higher returns for cash lenders, so they are better suited for investors wanting the highest rate on cash.
(D) is false: Accepting any U.S. Treasury collateral is a characteristic of GC repos, not special repos.

Explanation:

(B) is false: If the primary motivation is just to lend cash, the GC rate applies.
(C) is false: GC rates offer higher returns for cash lenders, so they are better suited for investors wanting the highest rate on cash.
(D) is false: Accepting any U.S. Treasury collateral is a characteristic of GC repos, not special repos.

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514.2. In contrast to general collateral (CG) repo rates, which of the following is TRUE about special repo rates?

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UAnonymous

Last updated: July 5, 2026 at 07:00

Special rates are typically less than general collateral rates

If the counterparty’s primary motivation is to lend cash rather than borrow a security, the special rate applies

Special rates are well-suited to repo investors who are looking to obtain the highest rate for the collateral they are willing to accept

The most commonly cited special rates are for overnight repos where any U.S. Treasury collateral is acceptable