Cleared repo: Models, benefits and potential growth

Richard Comotto, Gilbert Scherff and Martin Walker
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Richard Comotto: London Reporting House, UK
Gilbert Scherff: Asqin, Reitscheweg 45, The Netherlands
Martin Walker: Gillmore Centre for Financial Technology, UK

Journal of Securities Operations & Custody, 2025, vol. 17, issue 3, 219-233

Abstract: In June 2027 the clearing of repos on US Treasuries will become compulsory in the US market, and it is possible that regulators in other markets may follow suit. Given the high levels of non-cleared repo in both the US and Europe, increased mandating of clearing could have a major impact on the operation of the repo market and potentially more widely on financial markets. This paper puts those changes into the wider context of the motivations, origin and evolution of the cleared repo market since the 2000s in the US and Europe. It describes the mechanics and main characteristics of the major significant forms of cleared repo, provided by the Fixed Income Clearing Corporation (FICC), London Clearing House (LCH) and Eurex. It also describes recent market trends, concluding with an analysis of the potential impact of compulsory clearing in the United States and probability of other jurisdictions following the US example. This article is also included in The Business & Management Collection which can be accessed at https://hstalks.com/business/.

Keywords: repo; clearing; capital markets; sponsored repo; cleared repo; liquidity; DVP repo; GCF repo; capital; LCR; FICC; Eurex; CCP (search for similar items in EconPapers)
JEL-codes: E5 G2 K22 (search for similar items in EconPapers)
Date: 2025
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