Funding and Collateral Solutions

Centrally Cleared Repo Market Brief

A quarterly update on the developments in the centrally cleared sponsored repo market

March 2020

Through innovative and flexible cash investment and financing solutions, we provide both our custody and third-party clients access to the Fixed Income Clearing Corporation (FICC) sponsored repo platform.

Given the interconnectivity between repo markets, monetary policy and macroeconomic trends, we want to help you stay up to date on what’s happening in the market with a specific focus on the rapidly growing sponsored segment. With views on recent market trends and what to expect in the future, our quarterly briefs give you the insight you need to unlock the benefits of centrally cleared repo.

Highlights from this quarter:

  • 2019 was a break-out year for sponsored repo as program differentiators with market forces to drive massive demand from both cash investors and cash borrowers.
  • While government money market inflows in 2020 are unlikely to match those of 2019, we expect sponsored repo investment to remain healthy. We expect to see non-US funds, including UCITS and alternative funds, to continue to drive growth of sponsored volumes.
  • The Federal Reserve’s support through open market operations and US Treasury Bill purchases were sufficient to calm the repo market going into and coming out of year end 2019. The macroeconomic threat from novel coronavirus has driven repo markets into a new paradigm.
  • The sponsored repo landscape will change markedly in 2020 with the addition of new sponsoring firms, a term repo offering and continued diversification of the enrolled sponsored members.