BoE feedback statement on enhancing the resilience of the UK gilt repo market

The Bank of England (BoE) has published a feedback statement to its September 2025 discussion paper which sought views on proposed reforms to enhancing the resilience of the gilt repo market. Respondents were supportive of the objective of strengthening market resilience and broadly agreed with the BoE's assessment of market dynamics, but raised a range of concerns about the proportionality and potential negative spillovers of market wide measures.

Respondents acknowledged that greater use of central clearing could reduce systemic risks, however based on the current structure of the gilt repo market, many firms emphasised that access barriers, operational constraints and cost considerations mean central clearing is currently unfeasible or uneconomical for a large proportion of market participants. Therefore, firms would welcome innovation in this space through the introduction of cross product margining and new access models. Respondents also highlighted the potential concentration of risk arising from increased reliance on a single central counterparty, although the BoE considers much of this risk to be mitigated by existing supervisory and regulatory frameworks for central counterparties and will investigate further. Some respondents warned that the costs, and operational and legal complexities, of introducing a clearing mandate could reduce market participation and liquidity in both gilt cash and repo markets in normal conditions.

Overall, respondents favoured incentives to support voluntary adoption of central clearing rather than a market wide mandate. Most respondents opposed the potential introduction of minimum, non risk sensitive haircuts in non centrally cleared gilt repo, citing higher funding costs and risks of market fragmentation, though a small minority saw potential merit in carefully calibrated, risk sensitive approaches. Respondents also suggested complementary measures to enhance market resilience, including improvements to the Contingent Non-Bank Financial Institutions Repo Facility and the Sterling Monetary Framework, among others.

The BoE will continue to assess potential reforms during the year, in collaboration with the UK Financial Conduct Authority, HM Treasury and the UK Debt Management Office, with a view to publishing an update and possible policy proposals in early 2027, alongside appropriate notice and implementation timelines.

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