Friday, May 5, 2017

Difference between OIS Rate and Fed Funds Rate



I understand Fed Funds Rate is the rate at which banks lend/borrow to/from each other to maintain their daily reserve requirements at the Central Bank; also it is unsecured-meaning no collateral.


Is this the same as the OIS rate? I read somewhere that this effectively the same as the Fed Fund Rate- however, OIS is supposed to be secured lending rate, unlike Fed Funds rate. So, how can they be the same, or even similar?


Thanks.




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