Cleared repo for client business gets a lot right when it’s voluntary. Both clients and dealers report that there are cost savings, pricing improvement and risk reduction from using a CCP. This is true in the US, Canada, the UK and Europe, where volumes have been stable or growing across a range of monetary policy conditions. On a voluntary basis, clearing appears to support market liquidity in both repo and cash government bond markets. Mandatory clearing is a different thing however, and the evidence suggests a potential disruption to liquidity when every eligible counterparty needs to engage.
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