Defining the repo market
03 March 2026
Ruth Ferris, head of secured financing in Asia at MUFG, provides a deep dive into the repo market, from Europe to Asia Pacific, and the firm’s move to become a US primary dealer
Image: stock.adobe.com/Philip Steury
If I had to summarise the last 12 months in repo in one sentence, it would be: volumes stayed steady, but everything underneath them changed.
This was not a year defined by peaks and troughs in activity — it was a year defined by the three p’s: plumbing, policy, and platforms. The real story was structural: more flows migrating into clearing, more execution shifting onto electronic rails, more pressure to align settlement timelines with global peers, and more urgency around collateral mobility as central bank balance sheets continued to shrink.
In the US, the build-out towards mandatory Treasury clearing created a gravitational pull across the entire ecosystem. Sponsored models have rapidly grown in relevance, while the emergence of alternative central counterparty (CCP) capacity injected a new sense of competitiveness and optionality into what used to be a single-venue world. Add to this the push to eliminate duplicated margins in sponsored repo and the rise of real-time delivery-versus-payment (DvP), and you get a market that is behaving more like a modern liquidity network than a 20th Century funding engine.
Europe told a different but complementary story: record notional outstanding, increasingly electronic workflows, and year-end turns that felt more like ‘normal’ scarcity rather than pandemic-era distortion. The key message was simple: collateral agility now matters more than abundant reserves.
A regional breakdown
Asia Pacific became the quiet powerhouse in 2025 — and not just because I am sitting in the region watching it unfold in real time.
Hong Kong’s upgraded Northbound Repo Connect — now fully equipped with rehypothecation and multi-currency settlement — changed the economics of offshore renminbi funding almost overnight. Suddenly, collateral flowed with the kind of velocity global investors have wanted for years.
Mainland China complimented this by widening access to its onshore pledged repo market for overseas institutions, the region brought the world’s second-largest bond market a step closer to global practice.
And Australia? It quietly cemented repo as the beating heart of its monetary policy framework, with full-allotment operations making repo the domestic anchor point of liquidity management. But that was only the headline layer. Dig deeper and 2025 delivered a far more dynamic regional story.
South Korea re-emerged as one of APAC’s most important securities lending markets with the long-awaited lifting of its short selling ban in March. The moment the ban fell, demand snapped back — particularly in the technology and semiconductor names that had been stuck behind a regulatory wall for more than a year. Fees jumped, utilisation tightened, and Korea quickly reclaimed its spot on every lender’s radar.
Taiwan, meanwhile, continued to be a standout performer. With global appetite for anything linked to semiconductors, AI hardware, or advanced manufacturing, Taiwan’s lendable inventory simply could not keep up with demand. Borrowers chased names, lenders enjoyed premium revenues, and Taiwan once again emerged as one of APAC’s most consistently lucrative securities borrowing and lending (SBL) markets.
Japan saw its own surge — a mix of seasonal rotation, index rebalancing, and the global investor shift away from China and into Japanese equities. That reallocation alone kept volumes healthy and recalls busier than usual.
Further south, the emerging ASEAN markets finally began to turn potential into actual traction. Indonesia and the Philippines — both long talked about and historically difficult to access — registered growing interest as onshore hedging solutions and updated intermediation models made SBL workflows more feasible. They are not mainstream yet, but they are no longer theoretical either.
And across the region, fixed income SBL quietly gained momentum. Government and corporate bond lending revenues rose as demand for high-quality collateral picked up during bouts of global uncertainty. Equity lending revenue globally dipped, but APAC bucked the trend with more stable fees, firmer utilisation, and more consistent borrowing behaviour than in the US or Europe.
In short: APAC did not just remain resilient — it accelerated, diversified, and cemented itself as a structural driver of global repo and SBL liquidity. It is still a quiet powerhouse… just a lot less quiet.
A strategic move
While APAC was stealing headlines, the Middle East quietly stepped onto the secured-financing stage with real intent. Saudi Arabia and the United Arab Emirates (UAE) continued their push to modernise capital markets, with regional regulators and exchanges making it increasingly clear that repo and securities lending are no longer ‘nice-to-have’ infrastructure — they are strategic.
Saudi Arabia’s steady upgrades to its collateral and clearing framework are paving the way for deeper onshore liquidity and more genuine two-way flow, while the Kingdom’s sovereign issuance has created a more credible benchmark curve for both repo and SBL usage.
Down in the UAE, Dubai and Abu Dhabi accelerated their ambitions. The Dubai International Financial Centre (DIFC) has been positioning itself as a regional liquidity hub, courting global institutions to bring their secured-financing expertise and balance sheets into the Gulf — and the response has been noticeably warmer than in previous years. On the SBL side, demand for high-quality Gulf equities have grown steadily, particularly as regional markets attract more global index weight and more international short-term hedgers. Even local asset owners — historically conservative with lending — have begun exploring agent-lending structures as they look to monetise portfolios more actively.
Put simply, the Middle East has moved from ‘interesting’ to strategic. The region now sits at the intersection of major issuance pipelines, rapid capital-market evolution, and a growing international client base hungry for liquidity options that do not rely solely on US or European pipes.
And for firms like ours, it opens a new chapter. APAC is already a powerhouse; the Gulf may be the next one.
Core lesson of the year: it is no longer just about rates. Where and how you clear, settle, and mobilise collateral determines your economics. The smartest desks treated clearing-model selection as a capital decision, not a processing decision — and they won.
Navigating the challenges
Looking at the current challenges facing market participants — is the industry doing enough? There is a lot to applaud, but also a long tail of structural frictions that still deserve attention.
The first of three biggest challenges is margin fragmentation — as portfolios stretch across multiple CCPs, margin models diverge, addons fluctuate, and netting becomes harder to optimise. Lienbased triparty constructs help, but they do not fix everything. A second consideration is T+1 operational compression. With the UK and EU both landing on 11 October 2027, the entire chain — allocations, confirmations, foreign exchange, SBL recalls, settlement standard instructions (SSIs) — must compress into a trade date. And yes, ‘manual but fast’ is no longer an acceptable plan.
Lastly, there is dualvenue complexity in Europe. Active account requirements force firms to show meaningful usage of EU CCPs for certain product categories. That means dual flows, dual risk, dual oversight — and occasionally dual headaches.
Are we doing enough as an industry? Broadly yes — the move to electronic, standardised, machinereadable messaging is accelerating. Clearing access models are more flexible than ever. And industry-led initiatives are dealing with the worst frictions around duplicated margin and settlement.
So how is MUFG supporting clients? We made early bets where we believe it matters:
• T+1 playbooks for UK/EU, complete with mapped cutoffs, automated allocation rails, SSI ‘golden source’ governance, and automatic FX prefunding.
• Clearing geography orchestration, helping clients optimise EU CCP versus UK/International routes with representativeness metrics where required.
• We are working on high-integrity data and reporting, with lifecycle-accurate content for Íø±¬³Ô¹Ï Financing Transactions Regulation (SFTR), Sustainable Disclosure Requirements (SDR), and the European Market Infrastructure Regulation (EMIR).
• And, importantly, deep support in Asia, where multicurrency repo, pledged models, and crossborder settlement have become central to liquidity planning.
One of the most important shifts we made in 2024 and 2025 was not market driven at all — it was internal. We stepped back and analysed every MUFG entity holistically through the lens of our product, asking a simple question: are we using our own organisation as efficiently as the market deserves? And the honest answer was: not always.
So we did the work. We identified the pockets where accounting treatment, regulatory constraints, or balance sheet nuances tilted the economics in one location versus another — and instead of living with that friction, we moved trades and clients across the group to where they could be booked most efficiently. That is real optimisation.
But the destination is even bigger: we want to eventually be entity agnostic. For clients, that means a stable, predictable balance sheet regardless of booking location. For us, it means deeper relationships, more flexibility around how we price and execute, and the ability to unlock the full trading opportunity set across the whole MUFG platform, not just the entity someone happened to walk through first.
In other words, we are building a secured financing business where clients experience one MUFG — consistent, scalable, and completely aligned behind their funding, investment, and liquidity needs.
Capturing opportunity
One of the most significant developments for our business going into 2026 is MUFG’s elevation to the core of the US rates ecosystem: MUFG Íø±¬³Ô¹Ï Americas (MUSA) has been formally designated a US primary dealer by the Federal Reserve Bank of New York. This places MUFG inside the most exclusive circle of institutions responsible for supporting the world’s deepest and most systemically important government bond market.
As a primary dealer, MUSA will act as a trading counterparty to the New York Fed, participate directly in US Treasury auctions, and provide market intelligence to the Open Market Trading Desk — a role that only a handful of global institutions are trusted to perform.
For MUFG, this is not simply a technical designation; it marks a strategic arrival. It validates years of investment in our US markets platform, our balance sheet strength, our settlement infrastructure, and our ability to make markets at scale across the global rates complex.
The New York Fed’s decision reinforces MUFG’s long-term commitment to the US, where we have been a major investor for over 140 years. This recognition underscores the combination of financial strength and global reach that now puts MUFG shoulder-to-shoulder with the largest international houses operating in the US Treasury market.
Looking ahead to 2026 and beyond, primary dealer status accelerates everything we are trying to achieve: deeper client access, multi-CCP liquidity provision, expanded repo and securities-financing capacity, and a strengthened role across the full US rates value chain. It opens the door to greater participation in open-market operations, greater visibility with policymakers, and an entirely new level of relevance with real-money and macro clients who anchor their liquidity relationships around primary dealers.
For our markets franchise globally — from Tokyo to New York — it is a milestone. With Treasury clearing expanding, we have been investigating multi-CCP readiness and robust routing analytics. The objective is clear: help clients choose the best path based on economics, not plumbing.
A 2026 outlook for repo
If 2025 was structural, 2026 will be practical — and I am good at practical.
It is the year we stop designing and start proving: proving T+0 workflows actually work at scale; proving multi-CCP routing delivers real margin savings; proving that settlement performance can jump meaningfully; proving that data quality can finally meet the standards regulators have been threatening to enforce for years. The desks that show speed, certainty, and optimisation — not in a pitch, but in live flow — will be the ones the market rewards.
And layered onto that, MUFG has entered 2026 as a US primary dealer. That changes the shape of our opportunity set completely. It gives us deeper visibility into US rates flows, a bigger seat at the table in the largest sovereign market in the world, and crucially, the ability to tie global repo, SBL, and dollar funding directly into the heart of the Treasury complex. It amplifies everything we are trying to execute this year.
I anticipate three things:
1. Spread differentiation will widen between mono-CCP firms and those that can genuinely route, price, and optimise across multiple clearing venues.
2. Client segmentation will sharpen as investors demand portfolio-level transparency and meaningful evidence of settlement quality.
3. Technology will compound, turning repo/SBL into something closer to an always-on liquidity network rather than a set of disconnected workflows.
2026 is the execution year.
The firms that can orchestrate flexible clearing, analyse liquidity in real time, and settle at the pace T+1 demands, will not just set the price — they will win the client, the flow, and the future. And with our new US primary dealer platform now fully in play, as well as our APAC and MENA expansion, I expect MUFG to be right at the forefront of that shift — not following the market, but helping to define it.
This was not a year defined by peaks and troughs in activity — it was a year defined by the three p’s: plumbing, policy, and platforms. The real story was structural: more flows migrating into clearing, more execution shifting onto electronic rails, more pressure to align settlement timelines with global peers, and more urgency around collateral mobility as central bank balance sheets continued to shrink.
In the US, the build-out towards mandatory Treasury clearing created a gravitational pull across the entire ecosystem. Sponsored models have rapidly grown in relevance, while the emergence of alternative central counterparty (CCP) capacity injected a new sense of competitiveness and optionality into what used to be a single-venue world. Add to this the push to eliminate duplicated margins in sponsored repo and the rise of real-time delivery-versus-payment (DvP), and you get a market that is behaving more like a modern liquidity network than a 20th Century funding engine.
Europe told a different but complementary story: record notional outstanding, increasingly electronic workflows, and year-end turns that felt more like ‘normal’ scarcity rather than pandemic-era distortion. The key message was simple: collateral agility now matters more than abundant reserves.
A regional breakdown
Asia Pacific became the quiet powerhouse in 2025 — and not just because I am sitting in the region watching it unfold in real time.
Hong Kong’s upgraded Northbound Repo Connect — now fully equipped with rehypothecation and multi-currency settlement — changed the economics of offshore renminbi funding almost overnight. Suddenly, collateral flowed with the kind of velocity global investors have wanted for years.
Mainland China complimented this by widening access to its onshore pledged repo market for overseas institutions, the region brought the world’s second-largest bond market a step closer to global practice.
And Australia? It quietly cemented repo as the beating heart of its monetary policy framework, with full-allotment operations making repo the domestic anchor point of liquidity management. But that was only the headline layer. Dig deeper and 2025 delivered a far more dynamic regional story.
South Korea re-emerged as one of APAC’s most important securities lending markets with the long-awaited lifting of its short selling ban in March. The moment the ban fell, demand snapped back — particularly in the technology and semiconductor names that had been stuck behind a regulatory wall for more than a year. Fees jumped, utilisation tightened, and Korea quickly reclaimed its spot on every lender’s radar.
Taiwan, meanwhile, continued to be a standout performer. With global appetite for anything linked to semiconductors, AI hardware, or advanced manufacturing, Taiwan’s lendable inventory simply could not keep up with demand. Borrowers chased names, lenders enjoyed premium revenues, and Taiwan once again emerged as one of APAC’s most consistently lucrative securities borrowing and lending (SBL) markets.
Japan saw its own surge — a mix of seasonal rotation, index rebalancing, and the global investor shift away from China and into Japanese equities. That reallocation alone kept volumes healthy and recalls busier than usual.
Further south, the emerging ASEAN markets finally began to turn potential into actual traction. Indonesia and the Philippines — both long talked about and historically difficult to access — registered growing interest as onshore hedging solutions and updated intermediation models made SBL workflows more feasible. They are not mainstream yet, but they are no longer theoretical either.
And across the region, fixed income SBL quietly gained momentum. Government and corporate bond lending revenues rose as demand for high-quality collateral picked up during bouts of global uncertainty. Equity lending revenue globally dipped, but APAC bucked the trend with more stable fees, firmer utilisation, and more consistent borrowing behaviour than in the US or Europe.
In short: APAC did not just remain resilient — it accelerated, diversified, and cemented itself as a structural driver of global repo and SBL liquidity. It is still a quiet powerhouse… just a lot less quiet.
A strategic move
While APAC was stealing headlines, the Middle East quietly stepped onto the secured-financing stage with real intent. Saudi Arabia and the United Arab Emirates (UAE) continued their push to modernise capital markets, with regional regulators and exchanges making it increasingly clear that repo and securities lending are no longer ‘nice-to-have’ infrastructure — they are strategic.
Saudi Arabia’s steady upgrades to its collateral and clearing framework are paving the way for deeper onshore liquidity and more genuine two-way flow, while the Kingdom’s sovereign issuance has created a more credible benchmark curve for both repo and SBL usage.
Down in the UAE, Dubai and Abu Dhabi accelerated their ambitions. The Dubai International Financial Centre (DIFC) has been positioning itself as a regional liquidity hub, courting global institutions to bring their secured-financing expertise and balance sheets into the Gulf — and the response has been noticeably warmer than in previous years. On the SBL side, demand for high-quality Gulf equities have grown steadily, particularly as regional markets attract more global index weight and more international short-term hedgers. Even local asset owners — historically conservative with lending — have begun exploring agent-lending structures as they look to monetise portfolios more actively.
Put simply, the Middle East has moved from ‘interesting’ to strategic. The region now sits at the intersection of major issuance pipelines, rapid capital-market evolution, and a growing international client base hungry for liquidity options that do not rely solely on US or European pipes.
And for firms like ours, it opens a new chapter. APAC is already a powerhouse; the Gulf may be the next one.
Core lesson of the year: it is no longer just about rates. Where and how you clear, settle, and mobilise collateral determines your economics. The smartest desks treated clearing-model selection as a capital decision, not a processing decision — and they won.
Navigating the challenges
Looking at the current challenges facing market participants — is the industry doing enough? There is a lot to applaud, but also a long tail of structural frictions that still deserve attention.
The first of three biggest challenges is margin fragmentation — as portfolios stretch across multiple CCPs, margin models diverge, addons fluctuate, and netting becomes harder to optimise. Lienbased triparty constructs help, but they do not fix everything. A second consideration is T+1 operational compression. With the UK and EU both landing on 11 October 2027, the entire chain — allocations, confirmations, foreign exchange, SBL recalls, settlement standard instructions (SSIs) — must compress into a trade date. And yes, ‘manual but fast’ is no longer an acceptable plan.
Lastly, there is dualvenue complexity in Europe. Active account requirements force firms to show meaningful usage of EU CCPs for certain product categories. That means dual flows, dual risk, dual oversight — and occasionally dual headaches.
Are we doing enough as an industry? Broadly yes — the move to electronic, standardised, machinereadable messaging is accelerating. Clearing access models are more flexible than ever. And industry-led initiatives are dealing with the worst frictions around duplicated margin and settlement.
So how is MUFG supporting clients? We made early bets where we believe it matters:
• T+1 playbooks for UK/EU, complete with mapped cutoffs, automated allocation rails, SSI ‘golden source’ governance, and automatic FX prefunding.
• Clearing geography orchestration, helping clients optimise EU CCP versus UK/International routes with representativeness metrics where required.
• We are working on high-integrity data and reporting, with lifecycle-accurate content for Íø±¬³Ô¹Ï Financing Transactions Regulation (SFTR), Sustainable Disclosure Requirements (SDR), and the European Market Infrastructure Regulation (EMIR).
• And, importantly, deep support in Asia, where multicurrency repo, pledged models, and crossborder settlement have become central to liquidity planning.
One of the most important shifts we made in 2024 and 2025 was not market driven at all — it was internal. We stepped back and analysed every MUFG entity holistically through the lens of our product, asking a simple question: are we using our own organisation as efficiently as the market deserves? And the honest answer was: not always.
So we did the work. We identified the pockets where accounting treatment, regulatory constraints, or balance sheet nuances tilted the economics in one location versus another — and instead of living with that friction, we moved trades and clients across the group to where they could be booked most efficiently. That is real optimisation.
But the destination is even bigger: we want to eventually be entity agnostic. For clients, that means a stable, predictable balance sheet regardless of booking location. For us, it means deeper relationships, more flexibility around how we price and execute, and the ability to unlock the full trading opportunity set across the whole MUFG platform, not just the entity someone happened to walk through first.
In other words, we are building a secured financing business where clients experience one MUFG — consistent, scalable, and completely aligned behind their funding, investment, and liquidity needs.
Capturing opportunity
One of the most significant developments for our business going into 2026 is MUFG’s elevation to the core of the US rates ecosystem: MUFG Íø±¬³Ô¹Ï Americas (MUSA) has been formally designated a US primary dealer by the Federal Reserve Bank of New York. This places MUFG inside the most exclusive circle of institutions responsible for supporting the world’s deepest and most systemically important government bond market.
As a primary dealer, MUSA will act as a trading counterparty to the New York Fed, participate directly in US Treasury auctions, and provide market intelligence to the Open Market Trading Desk — a role that only a handful of global institutions are trusted to perform.
For MUFG, this is not simply a technical designation; it marks a strategic arrival. It validates years of investment in our US markets platform, our balance sheet strength, our settlement infrastructure, and our ability to make markets at scale across the global rates complex.
The New York Fed’s decision reinforces MUFG’s long-term commitment to the US, where we have been a major investor for over 140 years. This recognition underscores the combination of financial strength and global reach that now puts MUFG shoulder-to-shoulder with the largest international houses operating in the US Treasury market.
Looking ahead to 2026 and beyond, primary dealer status accelerates everything we are trying to achieve: deeper client access, multi-CCP liquidity provision, expanded repo and securities-financing capacity, and a strengthened role across the full US rates value chain. It opens the door to greater participation in open-market operations, greater visibility with policymakers, and an entirely new level of relevance with real-money and macro clients who anchor their liquidity relationships around primary dealers.
For our markets franchise globally — from Tokyo to New York — it is a milestone. With Treasury clearing expanding, we have been investigating multi-CCP readiness and robust routing analytics. The objective is clear: help clients choose the best path based on economics, not plumbing.
A 2026 outlook for repo
If 2025 was structural, 2026 will be practical — and I am good at practical.
It is the year we stop designing and start proving: proving T+0 workflows actually work at scale; proving multi-CCP routing delivers real margin savings; proving that settlement performance can jump meaningfully; proving that data quality can finally meet the standards regulators have been threatening to enforce for years. The desks that show speed, certainty, and optimisation — not in a pitch, but in live flow — will be the ones the market rewards.
And layered onto that, MUFG has entered 2026 as a US primary dealer. That changes the shape of our opportunity set completely. It gives us deeper visibility into US rates flows, a bigger seat at the table in the largest sovereign market in the world, and crucially, the ability to tie global repo, SBL, and dollar funding directly into the heart of the Treasury complex. It amplifies everything we are trying to execute this year.
I anticipate three things:
1. Spread differentiation will widen between mono-CCP firms and those that can genuinely route, price, and optimise across multiple clearing venues.
2. Client segmentation will sharpen as investors demand portfolio-level transparency and meaningful evidence of settlement quality.
3. Technology will compound, turning repo/SBL into something closer to an always-on liquidity network rather than a set of disconnected workflows.
2026 is the execution year.
The firms that can orchestrate flexible clearing, analyse liquidity in real time, and settle at the pace T+1 demands, will not just set the price — they will win the client, the flow, and the future. And with our new US primary dealer platform now fully in play, as well as our APAC and MENA expansion, I expect MUFG to be right at the forefront of that shift — not following the market, but helping to define it.
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