This working paper from the Office of Financial Research (OFR) analyzes the impact of cyber-induced operational outages on the U.S. repurchase agreements (repo) market. Using transaction-level data and cybersecurity ratings, the study simulates disruptions to key cash lenders, finding that such outages can disrupt over $100 billion in funding and increase repo rates by more than 50 basis points. The severity is sensitive to outage timing and duration, emphasizing the need for robust cybersecurity and institutional resilience.

The findings underscore the critical need for financial institutions, particularly those involved in short-term funding markets like repo, to enhance their cybersecurity preparedness and operational resilience. While this is a research paper and not a regulatory rule, it provides a framework for assessing cyber threats and their potential impact on market stability. Compliance officers should review their institution's cybersecurity posture and contingency plans in light of these findings, as disruptions can lead to significant financial losses and market volatility.