ICMA opposes mandatory clearing in response to BoE gilt repo resilience paper
The International Capital Market Association (ICMA) has published its response to the Bank of England (BoE)'s discussion paper on enhancing gilt repo market resilience. In its response, ICMA strongly opposes proposals for mandatory clearing and minimum haircuts for bilateral gilt repo transactions. ICMA argues that mandatory clearing would lead to increased costs, limit participant access, and exacerbate procyclicality. Additionally, the organization contends that minimum haircuts do not adequately reflect the nuances of individual risk management frameworks. The response, coordinated through a taskforce representing the entire gilt repo ecosystem, supports the concept of voluntary central clearing. It also recommends enhancements to the Sterling Monetary Framework as alternative policy measures.