This is all to the good, but not enough. At present, just 10 to 15 per cent of repo transactions are cleared through CDCS – not nearly enough to ensure that the markets remain open in times of stress.
While most of Canada’s major banks and securities broker-dealers are currently CDCS participants, the majority of Canadian repo trades involve at least one non-CDCS participant on one side of the transaction.3 Since CDCS cannot clear a trade unless both counterparties are participants, it will not be able to materially increase the proportion of the repo market that it serves without capturing a broader set of participants.