The European repo market is very different to that of the US, characterised as it is by fragmented capital markets, multiple domestic issuers, and diverse market infrastructure. In a panel titled “Navigating the expanding requirements for repo clearing – from the US to Europe” at the upcoming PostTrade 360° 2025 conference, Elina Lehtonen, vice president of cross-asset sales EMEA at Eurex will explain why Europe should play its own game.
Regulatory and operational aspects of cleared repo markets and the concept of mandatory repo clearing in Europe are highly relevant topics in light of the US’ Securities and Exchange Commission’s (SEC) decision to require the majority of US treasury market transactions to be cleared through an SEC-approved covered clearing agency. But Europe should avoid copying the US approach and instead align with its unique market structure.
“Targeted regulatory reforms can help realise the resilience, capital efficiency, and liquidity benefits of central clearing – especially in a multi-currency, multi-jurisdiction environment,” says Lehtonen.
Accelerated adoption of cleared repo by the buy-side is an important development in this market, with European pension funds, insurers, and asset managers increasingly clearing repo voluntarily to optimise liquidity and capital.
New interest
The session will be of interest to non-bank financial institutions evaluating the case for direct CCP access and looking to increase their understanding of regulatory changes as well as banks and broker-dealers assessing potential capital relief and trading efficiencies through cleared repo compared to bilateral.
“We have a number of buy-side companies in the onboarding phase,” concludes Lehtonen. “This indicates that pension funds, insurers, and asset managers increasingly want to trade cleared repo – a market that for a long time was only bank-to-bank.”
Have you signed up yet to be in Stockholm for PostTrade 360° 2025 on 3–4 September? It’s free for securities operations pros, both trading and investor sides! (Vendor firm representatives need a sponsorship agreement.) The powerful event website lets you register, see all other delegates, schedule sessions and meetings, and message. Find all related articles, including loads of teaser interviews, here.
