Bank of Canada Moves to Central Clearing to Curb Repo Risk (1)

The Bank of Canada will begin centrally clearing its repo operations, Governor Tiff Macklem said, as he flagged growing risks from hedge funds’ leveraged bets in government bonds and the rapid expansion of private credit.

The bank plans to join the Canadian Collateral Management Service — a platform that automates parts of repo transactions to cut inefficiencies — by early 2027. It also intends to use the Canadian Derivatives Clearing Corporation for central clearing once TMX Group completes its system upgrades.

In a market statement, the central bank said the changes will help develop the term‑repo market and “reduce frictions” ...