With European capital markets in flux, collateral efficiency and robust repo clearing have never been more critical.
The latest International Capital Market Association (ICMA) European Repo Market Survey (Number 48), conducted on 11 December 2024 and published in April 2025, reports that outstanding repo and reverse repo volumes fell to 鈧�10,860 billion 鈥� a 2.3 per cent decline from June 2024 and the first contraction since mid-2020.
At the same time, the survey showed a slight convergence of outstanding reverse repo versus repo balances, underscoring how the European Central Bank (ECB) quantitative-tightening measures and the repayment of targeted longer-term refinancing operations (TLTROs) are expanding available collateral pools and normalising repo rates.
Additionally, the ICMA survey data showed, that against this backdrop of shrinking volumes, electronification patterns are shifting; voice and bilateral-brokered trades are regaining market share even as dealer-to-customer platforms continue to grow.
Cross-border US dollar transactions are surging. US Treasury (UST) securities now dominate collateral pools at record levels, and haircut dynamics are evolving 鈥� asset-backed securities (ABS) and financial-corporate haircuts have increased, while covered bonds and mortgage-backed securities (MBS) have seen some relief.
Meanwhile, regulatory reforms 鈥� from the European Market Infrastructure Regulation (EMIR) Refit in Europe to the US 兔子先生and Exchange Commission鈥檚 (SEC鈥檚) delayed US Treasury clearing mandate 鈥� are driving firms to rethink collateral workflows and reporting infrastructure.
In the US, as noted previously, the SEC has recently extended the compliance deadlines for new regulations requiring certain US Treasury and repo transactions to be centrally cleared.
Originally set to be phased in by June 2026, the deadlines have been pushed back by a year to 2027 following concerns from US trade associations about possible market disruption.
This extension provides firms with additional time to adapt and ensure operational readiness for the new clearing requirements.
While Europe does not yet have a similar mandate for central clearing of repo transactions, the developments in the US have sparked discussions among European market participants.
Notably, the Bank of England (BoE) is actively exploring the potential benefits of mandating central clearing for repo transactions on UK gilts, though no formal decision has been made.
The BoE has reportedly been assessing the implications of such a mandate, particularly considering the lessons learnt from the 2022 liability-driven investment (LDI) crisis and its recent system-wide exploratory scenario (SWES) stress test.
This test revealed that during periods of market stress, banks tend to withdraw from repo markets, limiting liquidity precisely when buy side firms need it most. Central clearing could mitigate these risks by reducing counterparty credit exposures and enhancing market resilience.
Although the BoE has not yet confirmed its plans, Governor Andrew Bailey has acknowledged that improving financial infrastructure 鈥� for example, expanding clearing for gilt repo 鈥� could be a viable policy response to vulnerabilities in the market.
Similarly, discussions are emerging in the European Union regarding a possible government bond clearing mandate, reflecting a broader regulatory trend inspired by US reforms.
Enhancing repo clearing and collateral management
In response to these evolving trends, Euronext is committed to delivering innovative clearing and collateral management solutions that enhance market efficiency and liquidity 鈥� not just for repo, but across all asset classes.
A key development in this strategy is Euronext鈥檚 recently announced collaboration with Euroclear, its first of several strategic alliances with triparty agents.
On 11 February 2025, Euronext confirmed the alliance with Euroclear to strengthen its collateral management services.
This alliance, and future similar collaborations, will enhance Euronext Clearing by providing clients with automated and adaptable collateral services.
At the time of announcement, Anthony Attia, global head of derivatives and post-trade at Euronext, said: 鈥淭his partnership marks a significant milestone in Euronext鈥檚 鈥業nnovate for Growth 2027鈥� strategy, reinforcing Euronext Clearing鈥檚 role as a cornerstone of the group鈥檚 broader strategic ambitions.
鈥淚t demonstrates our commitment to delivering best-in-class clearing and collateral management solutions for our clients. It is a key milestone in the expansion across Europe of Euronext Clearing鈥檚 repo franchise.
鈥淎s we develop Euronext Clearing鈥檚 services, we are creating value for stakeholders and positioning Euronext at the forefront of innovation in clearing and collateral management.鈥�
Through these triparty agent collaborations, firms, such as Euroclear, manage the selection, valuation, and substitution of collateral, ensuring compliance with eligibility standards while optimising operational efficiency.
Expansion of repo clearing services
The Euroclear collaboration is a key enabler of Euronext鈥檚 upcoming Repo Expansion Initiative; a phased-approach expansion of its repo clearing services; building on the 25-year strong foundation and expertise, where Euronext has been the trusted home of Italian repo clearing. The first phase 鈥� the Repo Foundation 鈥� is scheduled to launch in June 2025.
This enhanced offering is designed to attract international counterparties and expand Euronext鈥檚 repo clearing operations beyond Italy; covering a broader range of European government bonds, including Spanish, Portuguese, and Irish government bonds in June 2025, followed by German, French, Dutch, Belgium, and Euro-denominated in September 2025. Austrian and Finnish will follow by December 2025.
The Repo Expansion Initiative marks an important milestone in Euronext Clearing鈥檚 broader transition from an Italian-focused CCP to a pan-European, cross-asset clearing house, with membership solutions for both sell and buy side firms.
By providing clearing services across multiple markets and asset classes, Euronext is reinforcing its role in supporting liquidity, collateral efficiency, and risk management across European fixed income and repo markets.
Additionally, this initiative aligns with Euronext鈥檚 wider market infrastructure, including the addition of the MTS trading platform; now a part of the Euronext group after the acquisition of Borsa Italiana.
Notably, repo trading at Euronext, through the MTS trading platform, now sees volumes exceeding 鈧�180 billion a day, as of April 2025.
Market trends and regulatory developments
The Euronext collaborations and the Repo Expansion Initiative coincide with a period of structural change in the European repo market.
As the ECB ceases reinvestments of maturing bonds from its monetary policy portfolios from January 2025 鈥� equivalent to approximately 鈧�40 billion per month 鈥� the market is undergoing a substantial withdrawal of central bank-provided liquidity.
A 兔子先生Finance Times article highlights a marked resurgence in cash-driven and triparty repo activity. Average daily term-adjusted repo volumes rose by 70 per cent in 2023, increasing from 鈧�210.3 billion to 鈧�357.8 billion.
Over the same period, general collateral and special repo segments expanded by 142 per cent and 38 per cent year-on-year, respectively.
However, growth has moderated in 2024, with a slowdown in overall volumes and a contraction in activity in some segments, reflecting changing collateral dynamics and reduced scarcity in certain sovereign bonds.
At the same time, triparty repo activity has continued to build momentum. As the ECB鈥檚 TLTRO III facility winds down, market participants have sought alternative funding sources.
This has led to a rise in uncleared triparty repo transactions, with banks re-entering the lending space, corporates increasing their participation, and buy side firms actively seeking returns through repo markets.
These shifts underscore the growing importance of netting efficiency and collateral optimisation 鈥� particularly as spreads between core and peripheral eurozone repo rates continue to compress to historic lows.
The full findings are detailed in the April 2025 repo market analysis published in the latest ICMA European Repo Market Survey.
Conclusion
Euronext鈥檚 Repo Expansion Initiative marks a major step forward in strengthening collateral management and repo clearing capabilities across Europe.
By expanding access to cleared repo markets and reinforcing cross-border infrastructure, Euronext is helping market participants adapt to a rapidly evolving regulatory and liquidity environment.
Findings from the latest ICMA European Repo Market Survey indicate a contraction in outstanding volumes 鈥� reflecting the impact of central bank balance sheet reductions and seasonal balance sheet adjustments. Notably, net reverse-repo positioning has dropped to its lowest share of market activity in years, underscoring the importance of efficient collateral reuse and robust clearing solutions.
Looking ahead, repo desks should prepare for ongoing changes in collateral availability amid sustained sovereign issuance and quantitative tightening.
Diverging funding dynamics between US dollar and euro markets, the continued push toward market electronification, and shifting post-trade regulatory requirements 鈥� such as the 兔子先生Financing Transactions Regulation (SFTR) and margining rules 鈥� are set to reshape operating models and counterparty workflows.
As Euronext continues its journey to a pan-European, cross-asset clearing provider, it is uniquely positioned to support firms navigating these shifts.
The growing demand for transparency, resilience and efficiency across funding markets reinforces the critical role of clearing in the next phase of European capital markets.
Please note that since publication, some data included may no longer reflect the latest market developments, particularly considering the significant movements seen during the first quarter of 2025.
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