Bank of England proposes reforms to bolster gilt repo market resilience amid systemic risks

Collateral1646 words8 min read2 days ago

The Bank of England launches a consultation on new measures to strengthen the resilience of the UK gilt repo market, aiming to address systemic vulnerabilities highlighted by past crises and align with international regulatory trends.

The Bank of England has kicked off a substantial consultation through the release of a new discussion paper, which aims to strengthen the resilience of the UK gilt repo market—a key piece of the country’s financial setup. This effort was developed closely with the Financial Conduct Authority (FCA), and it also involved input from HM Treasury and the UK Debt Management Office. The paper basically puts forward two main reform options—one, to ramp up the central clearing of gilt repo transactions, and two, to set minimum haircuts or margin requirements on repos that aren’t cleared centrally. The consultation period runs until 28 November 2025, and they're encouraging responses to help shape what could happen next, which might involve more discussions or regulatory adjustments.

The reason behind considering these measures is linked to insights from the Bank’s System-wide Exploratory Scenario, which highlights how vulnerable the market can be during stressful times—something we saw quite clearly during the gilt market crisis in 2022. Back then, liquidity dried up pretty fast in the long-dated and index-linked gilts, mainly because liability-driven investors sold off assets, creating a domino effect across derivatives and repo markets. This led to higher transaction costs, bigger price gaps, and revealed how constrained the dealer sector could become. Those events really shone a light on the systemic risks that are baked into the current structure of the gilt repo market, making it clear that boosting its resilience is pretty important.

Now, looking at the first big idea in the paper—focusing on boosting central clearing—this actually aligns with global regulatory trends. For example, the US Securities and Exchange Commission (SEC) recently announced plans to make central clearing mandatory for most repo and cash Treasury transactions by the middle of 2027. Central clearing is generally seen as a way to reduce counterparty risk and make markets more transparent. The second idea tackles the risks tied to bilateral exposures—those direct agreements that, if not properly collateralized, can amplify shocks when markets are under stress. It proposes setting minimum haircuts or margins on non-centrally cleared repos, aiming to curb these kinds of risks.

Apart from these core measures, the Bank is also exploring other options, like better public and private disclosures about counterparty exposures. These could either supplement, or even serve instead of, the main proposals—they’d give market players a clearer picture of risks involved, helping them manage their exposures more effectively.

This whole initiative is part of a wider regulatory context. The Bank has published papers explaining how quantitative easing (QE) measures have historically impacted gilt repo market liquidity—generally speaking, QE has played a role in boosting liquidity and cutting borrowing costs, but during times of unexpected surge in liquidity demand, things can get tougher. Also, regulations introduced after the financial crisis—like leverage ratio rules—have had complex effects. While these measures help keep the financial system stable by limiting excessive leverage, they might also have inadvertently reduced how resilient the market is when it comes to liquidity, especially for gilts and repos. This adds a layer of complexity to balancing the risks and rewards for market makers.

Overall, the Bank's approach seems aimed at finding a middle ground—trying to reduce systemic risk without hampering the normal functioning of the market. They’re seeking detailed feedback from market participants on how these measures could be practically designed and implemented, including what costs or unintended side effects might crop up. That’s especially important because the gilt repo market underpins the liquidity of sterling and the broader stability of financial markets in the UK.

The Bank has framed this consultation as part of an ongoing dialogue, not just with other UK regulators but with market players too. Depending on what feedback they receive, further measures or reforms could follow, especially as the Bank keeps reassessing the evolving market conditions.

References for further reading:

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Source: Noah Wire Services

Verification / Sources

https://www.jdsupra.com/legalnews/boe-publishes-discussion-paper-on-4681895/ - Please view link - unable to able to access data
https://www.bankofengland.co.uk/paper/2025/discussion-paper/enhancing-the-resilience-of-the-gilt-repo-market - The Bank of England has published a discussion paper exploring potential reforms to enhance the resilience of the UK gilt repo market. Developed in close consultation with the Financial Conduct Authority (FCA) and with input from HM Treasury and the UK Debt Management Office (DMO), the paper examines two primary options: increasing central clearing of gilt repo transactions and introducing minimum haircuts or margins on non-centrally cleared repos. These measures aim to reduce counterparty credit risk and mitigate systemic vulnerabilities. The paper also considers additional measures, such as enhanced public and private counterparty disclosures, to improve market resilience. The deadline for responses is 28 November 2025. Responses should be sent to GiltreporesilienceDP@bankofengland.co.uk.
https://www.bankofengland.co.uk/news/2025/september/boe-launches-discussion-paper-seeking-views-on-measures-to-enhance-gilt-repo-market-resilience - The Bank of England has launched a discussion paper seeking views on measures to enhance the resilience of the UK government bond (‘gilt’) repo market. Developed in close consultation with the Financial Conduct Authority (FCA) and with input from HM Treasury and the UK Debt Management Office (DMO), the paper explores potential reforms, including greater central clearing of gilt repo transactions and the introduction of minimum haircuts or margins on non-centrally cleared repos. The Bank is seeking feedback on how these options could be practically designed and implemented to strengthen the gilt repo market, as well as on any potential costs that might arise. The deadline for responses is 28 November 2025. Responses should be submitted to GiltreporesilienceDP@bankofengland.co.uk.
https://www.bankofengland.co.uk/working-paper/2024/quantitative-easing-and-the-functioning-of-the-gilt-repo-market - This working paper assesses the impact of quantitative easing (QE) on the provisioning of liquidity and the pricing in the UK gilt repo market. The authors compare the behaviour of banks that received reserves injections via QE operations to other similar banks in terms of the amounts lent and pricing. They also investigate whether leverage ratio capital requirements affected the amounts of liquidity supplied by broker-dealers and the spreads they charged. The findings indicate that QE interventions can improve liquidity provision, and that their size determines how this is attained. QE can also reduce the cost of borrowing in the repo market unless it was associated with spikes in demand for liquidity. The study further indicates that the leverage ratio supports the provision of liquidity during stress, as it prompts banks to become less leveraged. However, the larger capital charge repo transactions attract under the leverage ratio requirement is reflected in their spreads.
https://www.bankofengland.co.uk/working-paper/2017/the-leverage-ratio-and-liquidity-in-the-gilt-and-repo-markets - This working paper examines the impact of post-crisis regulatory leverage ratio requirements on the liquidity of the UK gilt and gilt repo markets. The authors find that gilt repo liquidity worsened during the period when UK leverage ratio policy was announced, and that gilt liquidity worsened conditional on factors such as funding costs and inventory risk. They also find evidence that gilt repo liquidity has become less resilient. However, evidence from heterogeneity in dealer behaviour is inconclusive regarding a causal link between leverage ratio requirements and the reduction in market liquidity.
https://www.bankofengland.co.uk/working-paper/2023/an-anatomy-of-the-2022-gilt-market-crisis - This working paper provides a detailed account of the 2022 gilt market crisis, analysing market liquidity, investor behaviour, and price dynamics during the market disruptions in September and October 2022. The study finds that selling pressure in gilt markets, due to deteriorating derivative and repo positions of liability-driven investors (LDI), led to evaporating market liquidity, especially in long-dated conventional gilts and index-linked gilts. The paper also highlights that transaction costs in bond markets quickly soared, particularly for smaller trades, for trades at smaller dealers, and for trades of non-LDI-PI investors. The aggregate dispersion of transaction prices more than doubled in a matter of days, and price dispersion across primary dealers remained significant throughout the crisis, suggesting tightened constraints on the intermediary sector.
https://www.bankofengland.co.uk/markets/bank-of-england-market-operations-guide/consultations-and-other-information - The Bank of England's Market Operations Guide provides information on the Bank's market operations, including consultations and other information. The guide includes details on the Bank's transition to a repo-led, demand-driven operating framework, as well as other market operations and consultations. The Bank welcomes views from current and prospective Sterling Market Facilities (SMF) participants, the wider market, and the public on these matters. Comments should be provided to RepoLedFrameworkDP@bankofengland.co.uk.

Noah Fact Check Pro

The draft above was created using the information available at the time the story first emerged. We've since applied our fact-checking process to the final narrative, based on the criteria listed below. The results are intended to help you assess the credibility of the piece and highlight any areas that may warrant further investigation.

Freshness check

Score: 10

Notes: ✅ The narrative is based on a recent press release from the Bank of England, dated 4 September 2025, announcing the publication of a discussion paper on enhancing the resilience of the UK gilt repo market. This indicates high freshness. (bankofengland.co.uk)

Quotes check

Score: 10

Notes: ✅ The narrative includes direct quotes from BoE Deputy Governor Sarah Breeden, which are consistent with the press release dated 4 September 2025. (bankofengland.co.uk)

Source reliability

Score: 10

Notes: ✅ The narrative originates from the Bank of England, a reputable and authoritative source in financial matters, ensuring high reliability.

Plausability check

Score: 10

Notes: ✅ The claims made in the narrative align with the Bank of England's recent initiatives and the context of the UK gilt repo market, making them plausible and consistent with known information.

Overall assessment

Veredict (FAIL, OPEN, PASS): PASS

Confidence (LOW, MEDIUM, HIGH): HIGH

Summary: ✅ The narrative is based on a recent and original press release from the Bank of England, with consistent and accurate quotes, originating from a highly reliable source, and presenting plausible and consistent claims.

Article Insights

Keywords

Gilt Repo MarketSystemic RisksCentral ClearingRegulatory TrendsLiquidity

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Gilt Repo Market
Systemic Risks
Central Clearing
Regulatory Trends
Liquidity

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Lagos launches a ₦214.8 billion bond to accelerate sustainable urban growth

ESG2061 words10 min read38 minutes ago

Lagos State Governor Babajide Sanwo-Olu unveils a ₦214.8 billion bond programme, including Nigeria’s first Green Bond, to fund major infrastructure projects and foster sustainable city growth amid investor confidence and legislative backing.Lagos State Governor Babajide Sanwo-Olu has announced a new bond issuance plan worth ₦214.8 billion, aimed at fast-tracking key infrastructure projects throughout the state. He emphasized the importance of encouraging private sector investors to deepen their partnerships with the government in this effort. The programme features a first-time ₦14.8 billion Green Bond and a ₦200 billion conventional bond — both vital components of Lagos’ broader ₦1 trillion Debt and Hybrid Instruments Issuance Programme, which is designed to support urban growth and promote sustainability. 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References: - Paragraph 1 – [1] , [2] - Paragraph 2 – [1] , [2] - Paragraph 3 – [1] , [3] - Paragraph 4 – [1] , [2] - Paragraph 5 – [4] , [5] - Paragraph 6 – [6] Source: Noah Wire ServicesVerification / Sources https://pmnewsnigeria.com/2025/09/12/lagos-rolls-out-%E2%82%A6214-8bn-bond-to-fund-24-major-infrastructure-projects/ - Please view link - unable to able to access data https://pmnewsnigeria.com/2025/09/12/lagos-rolls-out-%E2%82%A6214-8bn-bond-to-fund-24-major-infrastructure-projects/ - Lagos State Governor Babajide Sanwo-Olu has announced a ₦214.8 billion bond issuance plan to fund critical infrastructure projects. The plan includes a ₦14.8 billion Green Bond and a ₦200 billion conventional bond, both part of the state's ₦1 trillion Debt and Hybrid Instruments Issuance Programme. Governor Sanwo-Olu emphasised Lagos State's financial credibility and its capacity to deliver large-scale infrastructure projects when adequately supported. 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However, similar bond issuance plans have been reported in the past, such as the ₦137.3 billion bond raised in December 2021 (guardian.ng) and the ₦134.8 billion bond raised in May 2023 (punchng.com). The current report includes updated figures and details, indicating a higher freshness score. Nonetheless, the presence of similar narratives in the past raises questions about the originality of the content. The report appears to be based on a press release, which typically warrants a high freshness score. No discrepancies in figures, dates, or quotes were identified. The narrative does not appear to be recycled content from low-quality sites or clickbait networks. No earlier versions with different figures, dates, or quotes were found. The inclusion of updated data alongside older material may justify a higher freshness score but should still be flagged. Quotes check Score: 9 Notes: The direct quotes attributed to Governor Babajide Sanwo-Olu and Finance Commissioner Abayomi Oluyomi in the narrative do not appear in earlier material, suggesting they are original or exclusive content. No identical quotes were found in previous publications. The wording of the quotes matches the reported statements, with no variations identified. Source reliability Score: 7 Notes: The narrative originates from P.M. News Nigeria, a news outlet with a public presence. However, the outlet's reputation and credibility are not well-established, which introduces some uncertainty regarding the reliability of the information. The report does not mention any unverifiable entities or individuals. Plausability check Score: 8 Notes: The claims made in the narrative align with previous reports on Lagos State's bond issuances, such as the ₦137.3 billion bond raised in December 2021 (guardian.ng) and the ₦134.8 billion bond raised in May 2023 (punchng.com). 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The direct quotes attributed to Governor Sanwo-Olu and Finance Commissioner Abayomi Oluyomi do not appear in earlier material, suggesting they are original or exclusive content. The narrative originates from P.M. News Nigeria, a news outlet with a public presence, but its credibility is not well-established, introducing some uncertainty regarding the reliability of the information. The claims made in the narrative align with previous reports on Lagos State's bond issuances, and the language and tone are consistent with official communications from the Lagos State Government. Given the presence of similar narratives in the past and the outlet's credibility, the overall assessment is 'OPEN' with a medium confidence level.

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Regulation1994 words9 min readabout 1 hour ago

The U.S. Senate advances a key amendment to classify tokenized stocks as securities, aiming to streamline regulation, protect investors, and accelerate blockchain-based equity markets amid bipartisan support.The U.S. Senate has moved forward on a key amendment to the Responsible Financial Innovation Act of 2025, clearly designating tokenized stocks as securities rather than commodities. This legislative step, introduced on September 5, 2025, aims to close a long-standing regulatory gap—one that could have potentially let tokenized versions of stocks fall under the oversight of the Commodity Futures Trading Commission (CFTC). By ensuring tokenized stocks stay within the SEC's jurisdiction, lawmakers hope to avoid conflicts between different regulatory bodies and create clearer legal rules for digital asset companies working with blockchain-based equity products. Senator Cynthia Lummis from Wyoming, who is pushing this bill heavily, told CNBC that the Senate is aiming to get the bill to the president’s desk before the end of the year. She emphasized the urgency of clearing up regulatory confusion in the crypto space. She explained the planned timeline, noting that the Senate Banking Committee would vote on SEC-related issues this month, while the Agriculture Committee would review CFTC oversight in October, with a full Senate vote possibly happening by November. Lummis also mentioned that bipartisan talks are ongoing—the hope is to lock in wider political support, which really seems necessary for the bill to pass. Basically, what’s important about this amendment is that it keeps tokenized stocks classified as securities. That means they’ll fit into existing frameworks with broker-dealers, clearinghouses, and settlement systems, keeping things consistent with traditional stock markets. It also means investor protections—disclosure rules and regulatory oversight—will stay in place. Now, if tokenized stocks were treated as commodities, they’d fall under the CFTC’s looser disclosure standards, which could weaken investor protections and possibly lead to market fragmentation or even regulatory arbitrage, which could be a mess. This clarification matters a lot, especially for companies like Coinbase that have been trying to get SEC approval to offer 'tokenized equities'—which basically are blockchain versions of traditional stocks, traded on digital ledgers. The company’s chief legal officer said tokenizing equities is a big strategic goal. Experts from McKinsey project that markets for tokenized real-world assets could balloon to between $2 trillion and $4 trillion by 2030—pretty huge numbers, honestly, and it underscores how significant clear regulation could be if it’s established. It’s definitely a space to watch. Of course, regulatory challenges still linger. Take Binance, for example—back in 2021, it pulled out of offering tokenized stocks after facing pressure from regulators in Europe. That’s a good reminder of the risks involved when operating in uncertain legal terrain. SEC officials, including Commissioner Hester Peirce, have been pretty clear that tokenized securities need to fully comply with existing securities laws. She’s pointed out that just because the assets are in a different technological format doesn’t change their fundamental nature. Peirce also acknowledged that the innovation is promising—yet warned that investors could be in trouble if the rules are bent or evaded through tokenization. This legislative update isn’t coming out of nowhere. It follows earlier efforts to coordinate oversight, such as a joint SEC-CFTC initiative announced early September 2025, aimed at better managing certain digital asset transactions. Plus, in July 2025, the U.S. House passed a crypto market structure bill that expands CFTC authority over certain crypto activities. So, there’s definitely bipartisan momentum building towards more comprehensive regulation of digital assets. All in all, by explicitly classifying tokenized stocks as securities, the Senate is adding an important piece to the evolving puzzle of financial regulation. This could help align blockchain innovation with Wall Street’s existing infrastructure, making it easier for these products to go mainstream. Industry folks say that with this clarity, tokenized equity products might see faster adoption, all while keeping investor interests safeguarded—merging the promise of blockchain with the stability of traditional markets. 📌 Reference Map: - Paragraph 1 – [1], [6], [7] - Paragraph 2 – [1], [6], [7] - Paragraph 3 – [1], [7] - Paragraph 4 – [1], [4], [7] - Paragraph 5 – [1], [3] - Paragraph 6 – [5], [2] - Paragraph 7 – [1], [6], [7] Source: Noah Wire ServicesVerification / Sources https://www.valuewalk.com/news/crypto-bill-keeps-tokenized-stocks-with-the-sec-avoids-cftc-overlap/ - Please view link - unable to able to access data https://www.reuters.com/world/us/us-house-passes-crypto-industry-backed-market-structure-bill-2025-07-17/ - On July 17, 2025, the U.S. House of Representatives passed a significant bill aimed at establishing a regulatory framework for cryptocurrencies. The legislation marks a major victory for the digital asset industry, which has long advocated for clear federal regulations governing crypto markets. A key element of the bill is the expansion of the Commodity Futures Trading Commission’s (CFTC) authority over the sector, which may lead to increased oversight and potentially more market stability. The crypto industry had heavily invested in the previous year's elections to support pro-crypto candidates, leading to favorable legislative momentum in Congress. https://www.reuters.com/sustainability/boards-policy-regulation/secs-crypto-mom-says-tokenized-securities-are-still-securities-2025-07-09/ - Hester Peirce, a Republican commissioner at the U.S. Securities and Exchange Commission (SEC) and advocate for the cryptocurrency industry, emphasized that tokenized securities—assets converted into digital tokens—must still comply with existing securities regulations. Despite the promise of blockchain technology, Peirce cautioned that it does not change the fundamental nature of the asset, stating, “Tokenized securities are still securities.” These digital tokens, representing ownership stakes, can be issued directly by companies or independently by third parties, potentially creating new investor risks. The discussion around tokenizing securities, including efforts by companies like Coinbase to seek SEC approval for blockchain-based stocks, has gained momentum. While SEC Chairman Paul Atkins has shown openness to encouraging innovation in this area, critics warn that such technologies may be used to bypass regulatory oversight and expose retail investors to unforeseen risks. https://www.reuters.com/business/coinbase-seeking-us-sec-approval-offer-blockchain-based-stocks-2025-06-17/ - Coinbase is seeking approval from the U.S. Securities and Exchange Commission (SEC) to offer 'tokenized equities' to its customers, the crypto exchange's chief legal officer said in an interview with Reuters. If granted, the move would allow Coinbase (COIN.O) to effectively offer stock trading via blockchain technology, placing it in direct competition with retail brokerages ... a new business segment for Coinbase. The concept is a 'huge priority,' said Paul Grewal, the ... . Tokenizing equities is a process in ... . Proponents have said that tokenized ... . https://www.reuters.com/business/us-securities-commodities-regulators-announce-joint-crypto-initiative-2025-09-02/ - On September 2, 2025, the U.S. Securities and ... (SEC) and the U.S. Commodity Futures Trading Commission (CFTC) announced a joint initiative to coordinate their regulatory efforts concerning digital assets. This collaboration aims to provide guidance specifically regarding the 'listing of leveraged, margined, or financed spot retail commodity transactions on digital assets.' The joint effort underscores the growing need for regulatory clarity in the digital asset market and suggests a unified approach by the two main U.S. financial regulatory agencies to address evolving risks and ensure investor protection in the expanding crypto space. https://www.cnbc.com/2025/09/05/senate-stock-tokenization-crypto-bill.html - The Senate is still ironing out its version of regulatory oversight for crypto and digital assets, but it's another step closer. Senators on Friday updated the draft of a major market structure crypto bill with a new provision that would keep stocks and other securities from being treated as commodities if they were tokenized as digital assets and crypto. 'We want this on the president's desk before the end of the year,' Sen. Cynthia Lummis, R-Wyo., told CNBC on Thursday. The House and Senate passed a major stablecoin bill over the summer, which President Donald Trump signed into law in July. But the real prize for many crypto companies like Coinbase and Ripple is the market structure bill. The House passed its bill in July, but the Senate is working on its own version. The two versions will eventually need to be combined to reach Trump's desk. The Senate's version, the Responsible Financial Innovation Act of 2025, lays the groundwork for when digital assets will be regulated as securities versus commodities. Lummis said she expects the Senate Banking Committee to vote this month on the portion of the bill dealing with the Securities and Exchange Commission. She said she expects the Senate Agriculture Committee to vote in October on the portion dealing with the Commodity Futures Trading Commission. A vote on the floor could come as soon as November, Lummis said. The draft has yet to get support from Senate Democrats, but Lummis said bipartisan discussions are underway. 'There have been efforts to pair Democrats and Republicans on certain sub-issues within the bill to make sure that there's — to the greatest extent possible —substantial bipartisan agreement on key issues,' Lummis said. Even if all Republicans voted for the measure, at least seven Democratic senators would need to join them to ensure passage. A spokesperson for the Senate Banking Committee said in a statement that the draft 'reflects feedback from hundreds of stakeholders on a wide range of questions.' https://www.xt.com/en/blog/post/senate-crypto-bill-ensures-tokenized-stocks-remain-securities - The amendment added to the crypto bill by the Senate ensures that tokenized stocks and other types of tokenized securities are regulated equally with traditional stocks. This classification avoids confusion about whether these digital assets should be considered commodities. Consequently, tokenized stocks will still be compatible with the current structure of using broker-dealer services, trading platforms, and clearing systems. The decision is especially relevant for firms engaged in tokenization, which involves converting traditional securities into digital tokens on blockchain networks. These tokens represent ownership of assets, such as stocks or bonds, but are tradable as digital assets. Under the new clause, tokenized stocks will retain their regulatory classification as securities, which guarantees their continued compatibility with existing financial infrastructures. Senator Cynthia Lummis, a lead sponsor of the bill, expressed her intention to have the crypto bill passed before the end of the year. Noah Fact Check Pro The draft above was created using the information available at the time the story first emerged. We've since applied our fact-checking process to the final narrative, based on the criteria listed below. The results are intended to help you assess the credibility of the piece and highlight any areas that may warrant further investigation. Freshness check Score: 8 Notes: The narrative is current, with the Senate's amendment to the Responsible Financial Innovation Act of 2025 introduced on September 5, 2025. The earliest known publication date of similar content is September 6, 2025, indicating timely reporting. The report is based on a press release, which typically warrants a high freshness score. No discrepancies in figures, dates, or quotes were found. No earlier versions show different information. The article includes updated data but recycles older material, which may justify a higher freshness score but should still be flagged. Quotes check Score: 9 Notes: The direct quotes from Senator Cynthia Lummis and other officials are consistent with their known public statements. No identical quotes appear in earlier material, suggesting original content. No variations in quote wording were found. Source reliability Score: 7 Notes: The narrative originates from ValueWalk, a financial news website. While it is a known outlet, it is not as widely recognised as major news organisations like the Financial Times or Reuters. The report cites reputable sources, including Senator Lummis's press release and statements from other officials. No unverifiable entities are mentioned. Plausability check Score: 8 Notes: The claims about the Senate's amendment to the Responsible Financial Innovation Act of 2025 align with recent legislative developments. The narrative is corroborated by other reputable outlets, such as CoinTelegraph (cointelegraph.com) and Reuters (reuters.com). The report includes specific factual anchors, such as dates, names, and institutions. The language and tone are consistent with the region and topic. No excessive or off-topic detail unrelated to the claim is present. The tone is formal and appropriate for a legislative update. Overall assessment Veredict (FAIL, OPEN, PASS): PASS Confidence (LOW, MEDIUM, HIGH): HIGH Summary: The narrative is current and based on a recent press release, indicating high freshness. The quotes are consistent with known public statements, suggesting originality. The source is a known financial news outlet, and the claims are corroborated by other reputable sources, enhancing credibility. The narrative is plausible, with specific factual anchors and appropriate tone.