These changes haven’t extinguished the fire-sale risk. Efforts to move transactions onto central counterparty clearinghouses, which pool members’ capital to ensure losses at one firm don’t harm others, have proceeded at a glacial pace.

In 2008, the Fed had to step in -- by providing loan guarantees when Bear Stearns was absorbed by JPMorgan Chase & Co., and creating special facilities to prevent a cascade of repo collateral sales and to support its primary dealers.

“A lot has been resolved,” said Darrell Duffie, a finance professor at Stanford University who’s co-authored research on repos with Fed staffers. “That’s not to say that everything is perfect. There is still fire-sale risk that could be sparked if a dealer got into trouble. Those fire sales of collateral could bring down the prices of everything besides very safe securities, like Treasuries.”

Clearing Hurdle

The DTCC is spearheading central-clearing efforts and has brought some buy-side participants onto its platforms. Yet the biggest money funds in repo mostly don’t participate, in part due to regulatory mandates.

Regulators’ overhaul of the $3 trillion money-market fund industry -- a big source of demand for repo and other short-maturity debt instruments -- has helped bolster short-term markets, says Peter Yi at Northern Trust Asset Management, which manages $946 billion. That’s because in 2008 Lehman’s collapse -- which also brought down the $62.5 billion Reserve Primary Fund -- caused a run on money funds that only Treasury and the Fed programs stabilized.

“The industry better understands just how inter-connected these major broker-dealers are,” said Yi, head of short-term fixed income. “Investors and financial regulators now understand money markets were the proverbial canary in the coal mine during the crisis.”

Monopoly Power

Many claim the burden on major banks from mandates introduced after the financial crisis -- including Basel III and America’s Dodd-Frank regulations -- has reduced the appeal of dealing in repo as well as clearing and settlement in the industry.

Bank of New York Mellon Corp. is the only bank that remains active in settlement and clearing in the tri-party repo market after JPMorgan Chase & Co. left the business last year. This has unsettled some traders fretting that relying on a single clearing bank may mean trouble if something goes wrong.