Why repo volatility poses a systemic risk

Author: Lizzie Meager | Published: 16 Feb 2017

The levels of extreme volatility in the European repo market seen at the end of 2016 were unprecedented and if not resolved could pose a systemic risk, according to industry groups.

Speakers at an International Capital Market Association (ICMA) and European Repo and Collateral Council (ERCC) event in London on Tuesday morning said it’s not yet clear if what was seen at year-end was a one-off event or the new normal.

The ECB's bond-buying programme is one of the reasons for the volatility

Repurchase agreements, a transaction whereby a bank sells fixed income securities to an investor and buys them back at a later date for a different price, actually performed fairly well during the crisis but have become one of many victims of the regulation that followed.

“We accept the need for regulation, but this is an early warning – if it continues...



close Register today to read IFLR's global coverage

Get unlimited access to IFLR.com for 7 days*, including the latest regulatory developments in the global financial sector, updated daily.

  • Deal Analysis
  • Expert Opinion
  • Best Practice


*all IFLR's global coverage published in the last 3 months.

Read IFLR's global coverage whenever and wherever you want for 7 days with IFLR mobile app for iPad and iPhone

"The format of the Review has changed over the years; the high quality of its substantive content has not."
Lee C Buchheit, Cleary Gottlieb