Will Central Clearing Change the Market Structure of U.S. Treasury Repo to Become More Standardized and Trade on an All-to-All Basis?

Ketan B. Patel
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Ketan B. Patel: https://www.chicagofed.org/people/p/patel-ketan

No WP 2026-02, Working Paper Series from Federal Reserve Bank of Chicago

Abstract: This paper examines whether the SEC’s mandate for central clearing of U.S. Treasury repo transactions could enable all-to-all trading and support the development of a standardized term repo market. By mitigating counterparty risk through central clearing, cash lenders may become more willing to transact directly with a broader set of borrowers, reducing reliance on dealer intermediation. Clearing may also encourage greater participation in term repos beyond overnight tenors if counterparty risk is reduced. However, for all-to-all trading to take hold, the market must adopt more standardized contract terms, collateral schedules, and operational protocols, such as consolidated trade execution and post-trade processing. If these structural and operational hurdles are addressed, an all-to-all term repo market could emerge—enhancing liquidity, reducing rollover risk, and improving the resilience of the U.S. financial system.

Keywords: Central clearing; U.S. treasury repo; Financial Resilience; Central counterparty (CCP); Regulatory reform; all-to-all (search for similar items in EconPapers)
JEL-codes: D47 E43 E44 G12 G18 G23 (search for similar items in EconPapers)
Pages: 16
Date: 2026-04
New Economics Papers: this item is included in nep-mst
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DOI: 10.21033/wp-2026-02

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