A repo rate that is associated with general collateral securities such as Treasury bonds and notes, mortgage-backed securities, agency-sponsored securities, etc. It is the interest rate a lender in the repo market receives from a borrower, using such securities as collateral. In general, government securities are highly marketable and default-free, and thus they are preferred by lenders in the repo market.
More specifically, the lender of cash accepts any securities that are not special in the market and may be used to collateralize cash loans (collectively known as general collateral or for short as GC). In other words, the lender of cash (such as a bank, mutual fund, asset management fund, etc) is usually keen to earn interest income while limiting counterparty risk. Therefore, it chooses a class of securities that can be quickly and easily liquidated at a low transaction cost and without being exposed to an adverse price movement.
This rate is also known as a general collateral repo rate.
