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I would like to know how do Repo traders use FED Fund rates and OIS to cover themselves. For example assuming the repo trader bought paper(borrwed paper/lent cash) in the 1 year. How do they cover themselves? Do they do repo on open? or 3 month repos? and do they use FF rate and OIS to their advantage.

I am new to such product so your knowledge ins appreciated

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It's difficult to repo more than 3 months. Essentially a bank would be locking up their balance sheet over this time period which is difficult in this post crisis regulatory environment. So traders use OIS which is relatively more liquid to lock in financing by paying fixed on term OIS for example. That's why repo trades at a positive spread to OIS, while theoretically it should trade through because repo is collateralized.

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