The race to optimise the repo market
May 2026
OSTTRA’s Neil Taylor, head of securities finance, solution design, and Gary Hawkins, head of repo optimisation, speak to Carmella Haswell on the firm’s work to optimise the repo market and take it to its next stage
Image: fajarnuxs
How have you seen the significance of, and investment in, optimisation evolve over the past 10–15 years? How does this landscape apply to the repo market?
Gary Hawkins: If you look at the last 10–15 years, regulation in this post-crisis period has focused on leverage and risk in the banking system. The latest step in this evolution has been the US Federal Reserve recently publishing its final Basel III consultation, with the rollout slated to commence next year.
Consequently, this iterative process has necessitated a significant investment by banks and other market participants into addressing the financial resources related to their trading businesses.
Our optimisation solutions were designed with this challenge in mind. Over the past 20-plus years, these services have evolved to tackle issues such as leverage, risk-weighted assets, funding costs and counterparty credit risk, as well as other metrics critical for G-SIBs such as notional value.
Initially focused on interest rates, credit default swap, and FX, our expertise has significantly broadened and we now offer comprehensive services across all major asset classes.
Neil Taylor: Optimisation services, though well-established in the derivatives sector, have previously been absent from the broader repo market. Considering the increasing volumes in repo alongside relatively stable financing capacity, and the growing number of participants operating under a tightening regulatory environment, the need for new tools to support the market and create additional capacity is evident and timely.
Historically, building these services for the repo market has been complicated due to its inherent complexity. However, with the advancement of technology, we have developed intelligent solutions to overcome these hurdles, allowing us to offer participants services similar to those they may have used in other areas of securities finance.
Hawkins: One of the big changes is clearing. Regulators have progressively introduced far-reaching changes to the swaps market, implementing a clearing mandate across most asset classes. This trend is becoming increasingly relevant for the repo market, with the US scheduled to move to mandatory clearing next year.
Clearing helps mitigate certain risks such as total leverage and counterparty credit risk in the system, by enabling the netting of transactions through central counterparties (CCPs). Take up has primarily been concentrated in the inter-dealer market although there is now increasingly client participation.
How is OSTTRA working to optimise — for example — margin, balance sheet, and liquidity in cleared and uncleared repo?
Hawkins: While the repo market has its own idiosyncrasies, the core challenges around margin and leverage are very familiar to us. We are currently engaging with the dealer community on solutions for margin management, covering both cleared and uncleared markets, as well as total leverage. We have very active participation in pilot programmes for these solutions which we hope to launch in the near future.
How are regulatory initiatives, such as the US Treasury clearing mandate, shaping your repo offering and how you think about optimisation?
Taylor: We have a strong pedigree in helping firms transition into mandatory clearing environments. We were pivotal in moving the OTC swap market into that framework, and we are now highly focused on adapting those tools to support repo clearing more broadly.
We have the capabilities to support the adoption of clearing for US Treasuries, as well as globally, where mandates do not exist and markets are looking to expand their repo clearing capacity.
For US Treasury clearing, OSTTRA LimitHub is at the forefront of providing services for pre-execution credit checking for futures commission merchants and clients. Firms already use this service across various asset classes today, and we are actively expanding its coverage to include repo and cash products in the US.
We are also extending our middleware solution OSTTRA MarkitWire to be able to support the clearing mandate. While we already provide matching and affirmation for non-cleared repo transactions, we are expanding this capability to include cleared repo. This extension will allow firms to submit and match transactions before sending them on to the relevant CCPs. The idea behind all of this is to support the new access models that are being developed in the US, such as the done-away model which is of ever-increasing interest.
The services we are building are transferable across the globe as the need for repo clearing expands over time. These solutions are plug and play in all jurisdictions and can easily support clearing in other regions, and we are constantly anticipating future developments.
While we cannot predict whether mandated clearing will be introduced in those areas, we are confident that the voluntary clearing space will continue to expand.
Hawkins: As highlighted previously, clearing is a major theme in the current regulatory landscape, though we are seeing it implemented in stages. While mandatory clearing is already a reality for many asset classes, the repo market presents a unique set of challenges because it serves as a core financing product rather than a simple risk-transfer tool.
Because repo is now such an integral part of market infrastructure, not just bond financing, but also the constant movement of collateral and the transformation of financial resources, any such transition is more complex. There is a significant amount of operational groundwork required to manage these flows before the industry can be fully funnelled down a specific mandatory path.
The way clients use access to clearing to manage their own financial resources and risks is very likely to change, prompting the question, what does this mean for optimisation? In the US, the industry continues to grapple with many of the practical aspects of transitioning to mandatory clearing. Industry working groups are still trying to determine what it means for them as the participants, and their clients.
One of the historic challenges with the move to clearing in other asset classes is the potential for fragmentation. Our services are focused on allowing clients to execute in the most efficient way and then offering post-trade tools that simplify and unite processes to mitigate this challenge.
Surveys in the US and other regions indicate a varying level of understanding regarding the implications of this upcoming change. Awareness decreases significantly the further one is from the central point of activity. Initial efforts will prioritise a seamless transition, creating a solid foundation that allows for more sophisticated optimisation once the framework is in place.
Looking forward, what will be some of the key priorities for OSTTRA over the coming 12 months? Can you share any projects you may have in the pipeline?
Taylor: One of the biggest focuses we have more broadly is on the Treasury clearing mandate, because it has a regulatory deadline. We are actively engaging with the industry through working groups to ensure our solutions are fit for purpose within the market.
We are dedicating time and resources to develop the OSTTRA LimitHub and MarkitWire solutions. Beyond clearing, we are targeting pain points in the broader repo market, including non-cleared segments. Issues like pair-off and corporate action processing frequently come up in discussions, so we are exploring how and where in these workflows we can add value and remove manual processes for participants.
As part of our broader end-to-end repo services, we have portfolio reconciliation via OSTTRA triResolve, which supports the full reconciliation and mark-to-market of repo portfolios. This feeds into OSTTRA triResolve Margin facilitating the submission and agreement of margin calls across all asset classes. Both services have seen significant client demand and have robust roadmaps that continue to expand.
Hawkins: Operational efficiency remains a priority, particularly in portfolio reconciliation. Much like the evolution of credit markets 15 years ago, the repo space requires a more robust, sophisticated approach to reconciliation. We are collaborating closely with clients to build that infrastructure.
Regarding optimisation, we expect to launch several new services within the next quarter. As market infrastructure matures, we see a clear path to taking repo optimisation to its next stage.
As in other markets, OSTTRA is independent from clearing houses and is uniquely placed to help industry participants optimise exposures to reduce counterparty risks and associated costs, unlocking capital and reducing the systemic risks from the financial system.
Gary Hawkins: If you look at the last 10–15 years, regulation in this post-crisis period has focused on leverage and risk in the banking system. The latest step in this evolution has been the US Federal Reserve recently publishing its final Basel III consultation, with the rollout slated to commence next year.
Consequently, this iterative process has necessitated a significant investment by banks and other market participants into addressing the financial resources related to their trading businesses.
Our optimisation solutions were designed with this challenge in mind. Over the past 20-plus years, these services have evolved to tackle issues such as leverage, risk-weighted assets, funding costs and counterparty credit risk, as well as other metrics critical for G-SIBs such as notional value.
Initially focused on interest rates, credit default swap, and FX, our expertise has significantly broadened and we now offer comprehensive services across all major asset classes.
Neil Taylor: Optimisation services, though well-established in the derivatives sector, have previously been absent from the broader repo market. Considering the increasing volumes in repo alongside relatively stable financing capacity, and the growing number of participants operating under a tightening regulatory environment, the need for new tools to support the market and create additional capacity is evident and timely.
Historically, building these services for the repo market has been complicated due to its inherent complexity. However, with the advancement of technology, we have developed intelligent solutions to overcome these hurdles, allowing us to offer participants services similar to those they may have used in other areas of securities finance.
Hawkins: One of the big changes is clearing. Regulators have progressively introduced far-reaching changes to the swaps market, implementing a clearing mandate across most asset classes. This trend is becoming increasingly relevant for the repo market, with the US scheduled to move to mandatory clearing next year.
Clearing helps mitigate certain risks such as total leverage and counterparty credit risk in the system, by enabling the netting of transactions through central counterparties (CCPs). Take up has primarily been concentrated in the inter-dealer market although there is now increasingly client participation.
How is OSTTRA working to optimise — for example — margin, balance sheet, and liquidity in cleared and uncleared repo?
Hawkins: While the repo market has its own idiosyncrasies, the core challenges around margin and leverage are very familiar to us. We are currently engaging with the dealer community on solutions for margin management, covering both cleared and uncleared markets, as well as total leverage. We have very active participation in pilot programmes for these solutions which we hope to launch in the near future.
How are regulatory initiatives, such as the US Treasury clearing mandate, shaping your repo offering and how you think about optimisation?
Taylor: We have a strong pedigree in helping firms transition into mandatory clearing environments. We were pivotal in moving the OTC swap market into that framework, and we are now highly focused on adapting those tools to support repo clearing more broadly.
We have the capabilities to support the adoption of clearing for US Treasuries, as well as globally, where mandates do not exist and markets are looking to expand their repo clearing capacity.
For US Treasury clearing, OSTTRA LimitHub is at the forefront of providing services for pre-execution credit checking for futures commission merchants and clients. Firms already use this service across various asset classes today, and we are actively expanding its coverage to include repo and cash products in the US.
We are also extending our middleware solution OSTTRA MarkitWire to be able to support the clearing mandate. While we already provide matching and affirmation for non-cleared repo transactions, we are expanding this capability to include cleared repo. This extension will allow firms to submit and match transactions before sending them on to the relevant CCPs. The idea behind all of this is to support the new access models that are being developed in the US, such as the done-away model which is of ever-increasing interest.
The services we are building are transferable across the globe as the need for repo clearing expands over time. These solutions are plug and play in all jurisdictions and can easily support clearing in other regions, and we are constantly anticipating future developments.
While we cannot predict whether mandated clearing will be introduced in those areas, we are confident that the voluntary clearing space will continue to expand.
Hawkins: As highlighted previously, clearing is a major theme in the current regulatory landscape, though we are seeing it implemented in stages. While mandatory clearing is already a reality for many asset classes, the repo market presents a unique set of challenges because it serves as a core financing product rather than a simple risk-transfer tool.
Because repo is now such an integral part of market infrastructure, not just bond financing, but also the constant movement of collateral and the transformation of financial resources, any such transition is more complex. There is a significant amount of operational groundwork required to manage these flows before the industry can be fully funnelled down a specific mandatory path.
The way clients use access to clearing to manage their own financial resources and risks is very likely to change, prompting the question, what does this mean for optimisation? In the US, the industry continues to grapple with many of the practical aspects of transitioning to mandatory clearing. Industry working groups are still trying to determine what it means for them as the participants, and their clients.
One of the historic challenges with the move to clearing in other asset classes is the potential for fragmentation. Our services are focused on allowing clients to execute in the most efficient way and then offering post-trade tools that simplify and unite processes to mitigate this challenge.
Surveys in the US and other regions indicate a varying level of understanding regarding the implications of this upcoming change. Awareness decreases significantly the further one is from the central point of activity. Initial efforts will prioritise a seamless transition, creating a solid foundation that allows for more sophisticated optimisation once the framework is in place.
Looking forward, what will be some of the key priorities for OSTTRA over the coming 12 months? Can you share any projects you may have in the pipeline?
Taylor: One of the biggest focuses we have more broadly is on the Treasury clearing mandate, because it has a regulatory deadline. We are actively engaging with the industry through working groups to ensure our solutions are fit for purpose within the market.
We are dedicating time and resources to develop the OSTTRA LimitHub and MarkitWire solutions. Beyond clearing, we are targeting pain points in the broader repo market, including non-cleared segments. Issues like pair-off and corporate action processing frequently come up in discussions, so we are exploring how and where in these workflows we can add value and remove manual processes for participants.
As part of our broader end-to-end repo services, we have portfolio reconciliation via OSTTRA triResolve, which supports the full reconciliation and mark-to-market of repo portfolios. This feeds into OSTTRA triResolve Margin facilitating the submission and agreement of margin calls across all asset classes. Both services have seen significant client demand and have robust roadmaps that continue to expand.
Hawkins: Operational efficiency remains a priority, particularly in portfolio reconciliation. Much like the evolution of credit markets 15 years ago, the repo space requires a more robust, sophisticated approach to reconciliation. We are collaborating closely with clients to build that infrastructure.
Regarding optimisation, we expect to launch several new services within the next quarter. As market infrastructure matures, we see a clear path to taking repo optimisation to its next stage.
As in other markets, OSTTRA is independent from clearing houses and is uniquely placed to help industry participants optimise exposures to reduce counterparty risks and associated costs, unlocking capital and reducing the systemic risks from the financial system.
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