Collateral is no longer scarce—it’s abundant.

☑ Read my Blog Post. Link in Comment below.

For years, repo markets struggled with high-quality collateral shortages.
Liquidity was tight, and spreads were elevated.
Now, quantitative tightening and high net issuance are changing that.

What this means for the market:

1️⃣ Repo rates are normalising.
Collateral supply is pushing spreads lower.
Market pricing structures are adjusting fast.

2️⃣ Liquidity management is evolving.
More collateral means easier regulatory compliance.
But competition among collateral providers is rising.

3️⃣ Market stability is a double-edged sword.
More collateral can reduce stress-period risks.
Yet, tighter spreads may hit profitability.

4️⃣ Collateral preferences are shifting.
AA and A-rated assets are gaining traction.
A broader search for yield is reshaping demand.

5️⃣ Automation is redefining repo trading.
D2C platforms, risk management tech, and STP are expanding.
Operational efficiency is becoming a competitive edge.

6️⃣ Regulation is reshaping market structure.
NSFR recalibrations, balance sheet optimisation, and QT effects matter.
Market participants must stay agile.

The repo market is no longer what it was.
Adaptation is key to navigating new challenges.

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