Compared with equities, sovereign bonds and even corporate bonds, the repo market has been slow to adopt new technologies and adapt to new ways of working. But where it was once dominated by phone calls, spreadsheets and email, the market is now facing a demand for automation, while new US rules on mandatory clearing will shake up the way the market operates.
The US Securities and Exchange Commission (SEC) issued on December 13 new landmark regulations which include specific requirements for repo and reverse repo collateralised by US Treasury securities to be cleared centrally. Under the new rule, market participants will need to stump up collateral to back their positions, with central clearing agencies holding it separately.
