NY Fed Researchers Map Who Borrows and Lends in the $13.5 Trillion Repo Market
New York Fed researchers Gara Afonso, Jun-Davinci Choi, Gonzalo Cisternas, and Will Riordan published the first post in a three-part series explaining repo market participants. Citing OFR 2026 estimates, they report the U.S. repo market averages $13.5 trillion in daily outstanding agreements. Hedge funds are the largest cash borrowers, with repo borrowing rising from $400 billion in 2013 to $3 trillion by late 2025 to obtain leverage. Money market funds are the largest lenders, reaching $3 trillion in January 2026, using repos as regulated short-term investments that also provide redemption flexibility.
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The repo market is a core piece of U.S. financial infrastructure, yet its participant structure and trading motives remain poorly understood outside the industry. In an article published on September 28, 2026, New York Fed researchers Gara Afonso, Jun-Davinci Choi, Gonzalo Cisternas, and Will Riordan dissected who borrows and who lends in this market and why.
According to Office of Financial Research (OFR) 2026 estimates cited in the article, the daily amount of outstanding repurchase agreements in the U.S. is approximately $13.5 trillion, equivalent to 40 percent of U.S. GDP. A repo is essentially a collateralized short-term loan: one party sells a security for cash with a commitment to repurchase it at a prespecified price on a future date. Around 70 percent of repos are collateralized by U.S. Treasury securities, and most have an overnight maturity.
On the borrowing side, hedge funds have emerged as the primary cash borrowers. The article states that hedge funds rely on repo markets for leverage to boost their returns. In the "Treasury cash-futures basis trade," a hedge fund purchases a Treasury security and sells a Treasury futures contract to profit from the price differential, financing the purchase by borrowing cash in a repo using those securities as collateral. The data shows hedge fund repo borrowing tripled between 2013 and 2023 to reach $1.5 trillion, then doubled again over the next two years to hit $3 trillion by late 2025.