The Bank of England said in a feedback statement published on April 1, 2026 that it will continue work through 2026 on reforms to the gilt repo market and publish a comprehensive update, including potential policy proposals, in early 2027 with notice and implementation timelines.
The work follows its September 2025 discussion paper on enhancing the resilience of the gilt repo market, which examined broader central clearing and minimum haircuts or margins on non-centrally cleared repo. The Bank said the market is important for secured short-term funding against UK government bonds and for gilt market liquidity, government financing and monetary policy transmission. It cited stress episodes in March 2020 and September 2022 as reference points for its review.
Bank data showed hedge fund net gilt repo borrowing rose from £4 billion at the start of 2024 to £61 billion in March 2025, placing it in the top percentile of observations since 2017, with borrowing concentrated in a small number of funds. The Bank has also said zero or near-zero haircuts in dealer-to-client non-centrally cleared gilt repo can support leverage build-up at low cost.
In the feedback statement, respondents said central clearing could improve netting, counterparty risk management and transparency, but many also cited access barriers, operational constraints, costs and margin-related liquidity pressures. On minimum haircuts, most respondents opposed static floors, while the Bank said it would continue to assess system-wide effects, market-structure changes and the scope for more prudent margining in uncleared repo.