Cash Providers: Asset Dissemination over Intermediation Chains

摘要: Many financial assets are disseminated to final investors via chains of over-the-counter transactions between intermediaries (investors or dealers). We build a model where an agent buying some units the asset can offer sell part them OTC partner. Intermediation endogenously formed and impact asset's market liquidity, its issuance, who ultimately holds asset. An increase in intermediaries' funding liquidity (e.g. lower haircut on asset) makes intermediation less necessary but also it cheaper issue asset, increasing total volume be distributed number agents holding derive implications markets, dissemination ''toxic" collateral policy central banks CCPs.