It's funny to observe that one of the real QE goal is to short the interest rates volatility in order to cap the haircuts. In fact, by increasing the length of the collateral chains, it becomes counter-productive since the 6x re-using limits is reached, hence volatility goes up.
The law of diminishing returns applies to the collateral chains. Too much rehypothecation through a too large collateral chain is inducing a higher haircut. The liquidity has some reasons that the reason seems to ignore
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3:11 PM ยท Sep 10, 2021

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Replying to @Analystlearner
This was shown through October 2019 till March 2020 live when bills were being accumulated by the Fed while the market needed them much more.
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Ya there is kind of communicating vases between the velocity of T-bill, UST and corporates bonds.
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