Legislation is missing and, more importantly, administrative obstacles and lacking enforcement leave the full potential of the single market unexploited. The European single market is the largest in the world by value. The commitment and actions put forward by the European Commission in order to exploit the untapped potential of the single market are thus very much welcome and encouraging.
Instead, I will just lay out two stylized examples of SFTs that I can then use to illustrate the properties of various regulatory tools. Example 1: Broker-dealer as principal In this first example, a large broker-dealer firm borrows in the triparty repo market – from, say, a money market fund – in order to finance its own holdings of a particular security.