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Central Clearing in Repo Markets: Do the Benefits Extend to Non-Dealers?

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  • Danny Auger
  • Adrian Walton

Abstract

This note examines whether central clearing of repurchase agreements (repos) provides benefits not only to bank-owned dealers but also to non-dealer market participants in Canadian fixed-income markets. While prior research has largely emphasized the dealer perspective—showing that central clearing can reduce funding and balance-sheet costs—less is known about its implications for clients. Given the central role of repos in supporting liquidity and funding in Canadian fixed-income markets, understanding these broader effects is essential for evaluating the potential contribution of central clearing to market efficiency and resilience. This note explores how centrally cleared repos may affect non-dealer participation and considers whether expanded access to clearing could strengthen the overall functioning and stability of core Canadian funding markets.

Suggested Citation

  • Danny Auger & Adrian Walton, 2026. "Central Clearing in Repo Markets: Do the Benefits Extend to Non-Dealers?," Staff Analytical Papers 2026-31, Bank of Canada.
    • Handle: RePEc:bca:bocsap:26-31
    DOI: 10.34989/sap-2026-31
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    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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