Central Clearing in Repo Markets: Do the Benefits Extend to Non-Dealers?

Danny Auger and Adrian Walton

No 2026-31, Staff Analytical Papers from Bank of Canada

Abstract: This note examines whether central clearing of repurchase agreements (repos) provides benefits not only to bank-owned dealers but also to non-dealer market participants in Canadian fixed-income markets. While prior research has largely emphasized the dealer perspective—showing that central clearing can reduce funding and balance-sheet costs—less is known about its implications for clients. Given the central role of repos in supporting liquidity and funding in Canadian fixed-income markets, understanding these broader effects is essential for evaluating the potential contribution of central clearing to market efficiency and resilience. This note explores how centrally cleared repos may affect non-dealer participation and considers whether expanded access to clearing could strengthen the overall functioning and stability of core Canadian funding markets.

Keywords: Financial markets and funds management; Market structure (search for similar items in EconPapers)
JEL-codes: E44 G12 G21 G23 (search for similar items in EconPapers)
Date: 2026-06
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Persistent link: https://EconPapers.repec.org/RePEc:bca:bocsap:26-31

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