The implementation of CRR III and CRD 6 rules creates a bifurcated repo clearing market where model selection determines competitive advantage. Sponsored clearing models now dominate with 85-90% market share of indirect volumes at major CCPs, driven by their ability to deliver off-balance-sheet treatment and avoid the punitive 72.5% output floor for internal models. The capital efficiency gap is stark: total annual costs for a €1 billion ($1.2bn) repo portfolio range from €22.5 million for sponsored clearing to €150.2 million for principal models, representing a 6.7x differential that is reshaping market structure.
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