On 4 September 2025, the Bank of England (BoE) published a discussion paper (DP) on potential measures intended to enhance the resilience of the UK’s government bond (gilt) repo market.
The BoE sets out possible options in the DP including:
- Greater central clearing of gilt repo: This would be intended to provide benefits including enhancing dealer balance sheet efficiency, counterparty credit risk reduction, and the mitigation of risks from disorderly wind-down of highly leveraged and concentrated positions. However, the BoE also makes clear that these benefits would need to be weighed against the potential impact of greater central clearing on market functioning and liquidity.
- Minimum haircuts or margins on non-centrally cleared gilt repo: The BoE explained that these measures may also reduce counterparty credit risk and partially mitigate risks from the most highly leveraged positions, but that this should be weighed against any potential impact on trading costs.
Overall, the BoE recognises that no single measure would address fully all gilt repo market vulnerabilities in a way that minimises the impact on the cost of trading and market liquidity, and that a combination of measures could be more effective. The BoE therefore welcomes views on potential measures, either alternative or additional to those described in the DP, that could enhance the resilience of the gilt repo market.
The BoE has noted that it will consider next steps with other relevant UK authorises, such as HM Treasury, the Financial Conduct Authority, and the UK Debt Management Office, and that if measures are taken forward a consultation will follow.
The deadline for comments on the DP is 28 November 2025.