Working Paper

Will Central Clearing Change the Market Structure of U.S. Treasury Repo to Become More Standardized and Trade on an All-to-All Basis?

Abstract: This paper examines whether the SEC’s mandate for central clearing of U.S. Treasury repo transactions could enable all-to-all trading and support the development of a standardized term repo market. By mitigating counterparty risk through central clearing, cash lenders may become more willing to transact directly with a broader set of borrowers, reducing reliance on dealer intermediation. Clearing may also encourage greater participation in term repos beyond overnight tenors if counterparty risk is reduced. However, for all-to-all trading to take hold, the market must adopt more standardized contract terms, collateral schedules, and operational protocols, such as consolidated trade execution and post-trade processing. If these structural and operational hurdles are addressed, an all-to-all term repo market could emerge—enhancing liquidity, reducing rollover risk, and improving the resilience of the U.S. financial system.

JEL Classification: D47; E43; E44; G12; G18; G23;

https://doi.org/10.21033/wp-2026-02

Bibliographic Information

Provider: Federal Reserve Bank of Chicago

Part of Series: Working Paper Series

Publication Date: 2026-04

Number: WP 2026-02