Repo trades can be divided into those using general collateral (GC) and those using special collateral or "specials." In the former, the lender of cash is willing to take any particular security, although the broad categories of acceptable securities might be specified with some precision. In specials trading, the lender of cash initiates the repo in order to take possession of a particular security. Bonds most in demand to be borrowed are said to be trading special, although any request for specific collateral is a specials trade.

Things to Remember

1. Repo trades can be divided into those using general collateral (GC) and those using special collateral or 'specials'.
2. In general collateral trading, the lender of cash is willing to accept any particular security, although the broad categories of acceptable securities might be specified with some precision.
3. In specials trading, the lender of cash initiates the repo in order to take possession of a particular security.
4. Bonds most in demand to be borrowed are said to be trading special, although any request for specific collateral is a specials trade.
5. 'Trading special' does not refer to any specific type of bond (e.g., government bonds, zero-collateral bonds), but rather to bonds that are most in demand to be borrowed.