In particular, the settlement process for triparty repo trades continues to rely on massive amounts of intraday credit and, as a result, remains vulnerable to a decision by a clearing bank to withhold funding from a market participant in default or perceived as facing distress.
The FSOC has recommended reforms to deal with these problems, and an industry task force has taken some key initial steps in that direction – for example, by coordinating the implementation of a robust confirmation process for triparty trades. But more needs to be done.