BoE works towards long-term reforms for gilt repo
20 July 2026 UK
Image: Coloures-Pic/stock.adobe.com
The Bank of England (BoE) has announced that further action is required in the gilt repo market in order to 鈥渁bsorb rather than amplify stress鈥�.
According to Sarah Breeden, Deputy Governor for Financial Stability, the Bank will continue to consider how reforms on greater central clearing and minimum haircuts, set out in the Bank鈥檚 2025 discussion paper, could be tailored to specific features of sterling markets.
The Bank will explore changes in market structure that would enable the greater adoption of central clearing, and measures that would support more prudent risk management practices and margining in the non-centrally cleared gilt repo market.
Breeden says the Bank will progress this work over 2026, publishing further analysis to inform the debate but warns that these are complex reforms which will take time.
鈥淲e recognise their careful design will be critical to achieving the intended financial stability benefits of enhancing gilt repo resilience while balancing any costs, operational considerations, and market impact,鈥� she adds.
Market participants are encouraged to engage with the issues and questions such as: how could market structure evolve as central clearing increases and which cross-product or cross-currency netting sets would bring the largest benefits? Are there barriers to sponsored models that are specific to the UK market?
Breeden concludes: 鈥淐hange of this kind will likely take years, not months. But the discussion must start now 鈥� because the prize is not just lower risk, but a stronger and more efficient market for all.鈥�
According to Sarah Breeden, Deputy Governor for Financial Stability, the Bank will continue to consider how reforms on greater central clearing and minimum haircuts, set out in the Bank鈥檚 2025 discussion paper, could be tailored to specific features of sterling markets.
The Bank will explore changes in market structure that would enable the greater adoption of central clearing, and measures that would support more prudent risk management practices and margining in the non-centrally cleared gilt repo market.
Breeden says the Bank will progress this work over 2026, publishing further analysis to inform the debate but warns that these are complex reforms which will take time.
鈥淲e recognise their careful design will be critical to achieving the intended financial stability benefits of enhancing gilt repo resilience while balancing any costs, operational considerations, and market impact,鈥� she adds.
Market participants are encouraged to engage with the issues and questions such as: how could market structure evolve as central clearing increases and which cross-product or cross-currency netting sets would bring the largest benefits? Are there barriers to sponsored models that are specific to the UK market?
Breeden concludes: 鈥淐hange of this kind will likely take years, not months. But the discussion must start now 鈥� because the prize is not just lower risk, but a stronger and more efficient market for all.鈥�
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