Central Clearing for Government Securities Repos: A CCP-Centric Perspective

IMF Working Papers, June 12, 2026

Source details

Canonical URL: Central Clearing for Government Securities Repos: A CCP-Centric Perspective

Government securities-backed repo markets constitute a key funding source for market participants in many jurisdictions.
Recent stress episodes in repo markets (for example, in US and UK repo markets) have prompted renewed efforts to strengthen repo market resilience.
A key policy response under consideration is increased central clearing via central counterparties (CCPs), which may be driven by market incentives or by mandatory clearing.
Central clearing is commonly considered a tool to increase transparency and understanding of markets and improve the risk management practices of market participants.
The paper provides:
- A brief overview of post trade-arrangements in select government securities repo markets.
- A structured analysis of potential benefits and risks of bringing repo markets onto centrally cleared platforms from a CCP perspective.
- A list of key considerations for CCPs—and indirectly—policy makers when exploring the expansion of repo clearing services or opting for a repo clearing mandate.

Central clearing can enhance transparency and market understanding and can improve participants’ risk management practices.
Transitioning repo transactions from a decentralized, uncleared set-up to central clearing has the potential to make repo and government bond markets more resilient, provided key considerations are addressed.
Beyond access modalities to repo clearing services, default management and market structure-related aspects are of key importance to ensure a successful transition.

Access modalities to repo clearing services:
- How CCPs design access (direct membership, indirect access, interoperability) matters for market functioning and resilience.
Default management:
- Robust default management frameworks specific to repo transactions are critical when central clearing is expanded.
Market structure-related aspects:
- The structure of the underlying government securities and their post-trade arrangements in each jurisdiction affect the feasibility and design of repo central clearing.
Interplay with policy decisions:
- CCPs’ internal choices and policy makers’ decisions (including potential mandates) are interlinked and jointly determine whether central clearing will achieve resilience objectives.

Policymakers and CCPs should evaluate repo clearing expansion or mandates taking into account:
- Access arrangements to ensure broad and appropriate participation.
- Default management capabilities tailored to repo markets.
- Market structure characteristics and post-trade plumbing of government securities in the relevant jurisdictions.
Ensuring these factors are addressed increases the likelihood that central clearing will be conducive to more resilient repo and government bond markets.