Bank of England to review measures on gilt repo market
05 September 2025 UK
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The Bank of England (BoE) has published a discussion paper on potential measures to enhance the resilience of the UK gilt repo market.
The paper presents two possible options: greater central clearing of gilt repo and minimum haircuts or margins on non-centrally cleared gilt repo.
According to the BoE, greater central clearing has the potential to enhance dealer balance sheet efficiency, reduce counterparty credit risk, and mitigate risks from the 鈥渄isorderly unwind鈥� of highly leveraged, concentrated positions.
Similarly, the Bank argues that minimum haircuts or margins on non-centrally cleared gilt repo may also reduce counterparty credit risk and mitigate risks from the most highly leveraged positions.
BoE is seeking feedback on how these options could be practically designed and implemented as alternatives to, or alongside greater central clearing or minimum haircuts, such as greater public and private counterparty disclosures.
Sarah Breeden, deputy governor for financial stability, comments: 鈥淚t鈥檚 essential that market-based finance and core sterling rates markets absorb rather than amplify shocks to ensure the financial system continues to provide vital services to the real economy even during periods of stress.
鈥淲e鈥檝e already taken meaningful steps towards addressing vulnerabilities in the gilt repo market, but it is important that we continue to explore reforms. This discussion paper will allow us to progress our thinking on several key potential options.鈥�
Within its announcement, the BoE emphasised the significance of government bond markets to financial stability, and how the repo market plays an 鈥渆ssential role鈥� in the smooth operation of government bond markets. .
A range of jurisdictions are exploring and, in some cases implementing, measures to enhance the resilience of their government bond repo markets.
In the US, the 网爆吃瓜 and Exchange Commission (SEC) mandated central clearing for most repo and cash US Treasury transactions by mid-2027 to mitigate systemic risks from non-centrally cleared transactions and support orderly market functioning.
In addition to domestic work, the Financial Stability Board (FSB) continues to co-ordinate a broad agenda of international work to mitigate risks to core financial markets.
Following feedback on the discussion paper, the Bank will work alongside other UK authorities to establish its next steps.
The paper was developed in close consultation with the Financial Conduct Authority (FCA), with input from HM Treasury and the UK Debt Management Office (DMO).
The paper presents two possible options: greater central clearing of gilt repo and minimum haircuts or margins on non-centrally cleared gilt repo.
According to the BoE, greater central clearing has the potential to enhance dealer balance sheet efficiency, reduce counterparty credit risk, and mitigate risks from the 鈥渄isorderly unwind鈥� of highly leveraged, concentrated positions.
Similarly, the Bank argues that minimum haircuts or margins on non-centrally cleared gilt repo may also reduce counterparty credit risk and mitigate risks from the most highly leveraged positions.
BoE is seeking feedback on how these options could be practically designed and implemented as alternatives to, or alongside greater central clearing or minimum haircuts, such as greater public and private counterparty disclosures.
Sarah Breeden, deputy governor for financial stability, comments: 鈥淚t鈥檚 essential that market-based finance and core sterling rates markets absorb rather than amplify shocks to ensure the financial system continues to provide vital services to the real economy even during periods of stress.
鈥淲e鈥檝e already taken meaningful steps towards addressing vulnerabilities in the gilt repo market, but it is important that we continue to explore reforms. This discussion paper will allow us to progress our thinking on several key potential options.鈥�
Within its announcement, the BoE emphasised the significance of government bond markets to financial stability, and how the repo market plays an 鈥渆ssential role鈥� in the smooth operation of government bond markets. .
A range of jurisdictions are exploring and, in some cases implementing, measures to enhance the resilience of their government bond repo markets.
In the US, the 网爆吃瓜 and Exchange Commission (SEC) mandated central clearing for most repo and cash US Treasury transactions by mid-2027 to mitigate systemic risks from non-centrally cleared transactions and support orderly market functioning.
In addition to domestic work, the Financial Stability Board (FSB) continues to co-ordinate a broad agenda of international work to mitigate risks to core financial markets.
Following feedback on the discussion paper, the Bank will work alongside other UK authorities to establish its next steps.
The paper was developed in close consultation with the Financial Conduct Authority (FCA), with input from HM Treasury and the UK Debt Management Office (DMO).
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