SIX celebrated in 2024 a decade since the launch of its repo business. Reflecting on its role for local and international firms, SIX shared lessons learned, and explored what the next decade might hold. Back in June, this included discussions on increased global participation from central banks, insurers, and fund managers, greater emphasis on collateral mobility to navigate Basel III and SFTR, and enhanced transparency in securities finance transactions driven by stricter reporting requirements.
Now, we take a closer look at what lies ahead in 2025. The European repo market stands at a pivotal juncture, shaped by macroeconomic, regulatory, technological, and operational factors. SIX remains committed to addressing the structural trends, challenges, and opportunities that will shape the market over the next 12 months and beyond. In the remainder of this piece, we look at key themes we expect to play a big role in securities finance in 2025 and how SIX is positioned to support the market.
Macroeconomic Pressures and Central Bank Policy Making
Central banks, particularly the European Central Bank (ECB), will play a decisive role in shaping the repo market. The ECB’s interest rate policies and quantitative tightening (QT) measures, including the reduction of asset purchases, could influence repo rates and collateral availability. While QT might ease collateral scarcity in the medium term, it also raises concerns about liquidity, underscoring the importance of reliable central bank liquidity facilities. In this evolving environment, SIX’s CO:RE platform stands out. By moving from OTC repos to a platform that guarantees collateralisation and settlement, CO:RE plays a key role in supporting repo market stability.
The balance between cash-driven and securities-driven repos will hinge on macroeconomic conditions and central bank policies. While securities-driven repos are expected to remain stable, cash-driven repos could see renewed momentum as central banks unwind asset purchases. Collateral scarcity, a persistent challenge in recent years, is gradually easing, but the demand for high-quality liquid assets (HQLA) will remain strong. Market participants are likely to intensify their focus on collateral transformation and optimisation strategies to adapt to this evolving landscape.
Economic uncertainties will also influence investor behaviour, with a growing emphasis on risk management and liquidity preservation. Floating-rate repos, although niche, may gain traction as market participants seek tools to manage interest rate exposure. As risk appetites shift, the development of innovative products, such as Linked Repo, could cater to emerging needs while driving market evolution. Here, SIX plays a key role in supporting market transparency through robust reporting and data services, offering collateral optimisation solutions – such as Linked Repo – to help firms navigate changing collateral requirements.
Adjusting to increased regulatory complexity
Market participants will likely turn to repos as a critical tool to navigate these tighter regulatory timelines. Securities Financing Transactions Regulation (SFTR) and Central Securities Depositories Regulation (CSDR) will continue to demand stricter transparency, reporting, and settlement discipline.
These frameworks, coupled with the updates to the Basel III capital requirements, are challenging market participants to adapt their operational models. Meanwhile, T+1 settlement cycles, while promising to enhance efficiency and reduce systemic risk, place immense pressure on intraday liquidity management and collateral mobilisation.
Operational Evolution: Time for Automation and Innovation
Technological advancements and the push towards automation will also reshape the operational dynamics of the repo market. Electronic trading platforms and integrated infrastructures will drive efficiency and reliability, addressing the growing demand for speed and precision in a T+1 environment.
SIX is at the forefront of this evolution, offering a fully integrated value chain that includes advanced trading platforms and a ‘Collateral Cockpit’ for efficiency improvements, enhanced market transparency through robust reporting and data services, and collateral management and optimisation solutions.
Enabling the Future
SIX is well-positioned to support the European repo market’s transformation. By providing advanced trading platforms, settlement services, and collateral optimisation tools, SIX enhances efficiency, transparency, and resilience.
Leveraging its expertise in markets like Switzerland and Spain, SIX is focused on growing its international presence, attracting even more non-Swiss participants, and facilitating cross-border transactions while simplifying collateral movements. In recent years, particularly, the SIX repo market has seen a notable increase in transaction volumes from EU and UK-based banks, dealing in Swiss franc, euro, sterling, and dollar collaterals. This growth underscores the role of SIX as a key player in global repo markets.
The European securities finance market in 2025 is poised for significant growth and transformation, driven by regulatory demands, macroeconomic uncertainties, and operational advancements. Working with a trusted partner will be essential as market participants look to navigate the complexities of the repo market. By leveraging innovative solutions and robust infrastructure developed by market infrastructure providers like SIX, the industry can address the challenges that lie ahead effectively, while unlocking and capitalising on emerging opportunities for growth.
Find out more about our Repo offering: www.six-group.com/repo