... just two banks, Bank of New York Mellon and JPMorgan Chase, now dominate the business, standing in the middle of repo deals as clearinghouses, Morgenson argues...

New regulations in the works would require banks to hold capital against assets they finance in the repo market. That could prompt them to shrink their repo operations, which could reduce liquidity of the Treasury debt. Regulations have shrunk the repo market from $7.02 trillion in the first quarter of 2008 to $4.6 trillion daily outstanding, Bloomberg reports.

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