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I've noticed that the repo rate (here I mean the effective financing rate of the forward position in stock) implied from synthetic forwards is almost the same as money market benchmark (XXXibor 3M) for easy-to-borrow stocks like constituents of indices. This is true for Eurozone, but also APAC. In US on the other hand, the repo is greater than US Libor 3M by ~20 basis points.

My question is: why it is the case?

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    $\begingroup$ You stated an observation you made. Fine, but could you clarify what the question is? $\endgroup$ – byouness Jun 9 '18 at 0:38
  • $\begingroup$ Interesting question $\endgroup$ – Permian Nov 23 '18 at 19:34
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If the stock is not special, i.e. no high demand for borrowing, and adequate haircut is taken (i.e. collateral value over and above the cash extended), then there is effectively no credit risk in the repo trade, so the rate should be very close to money market levels. Anything further away points to either: i) specialness of the stock or ii) credit risk, e.g. due to haircut being aggressively small

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