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Central bankers are confident that inflation will remain muted because there isn’t enough consumer demand to bid prices higher.Sean Kilpatrick

Canada's new repo agreement clearing system is marking the end of its first week in operation, with contracts now flowing through the central counterparty run by Canadian Derivatives Clearing Corp.

After a long learning curve, the system opened for business on Feb. 21. It's not fully up and running, as there will be a 13-week ramp up as more products are added to the clearing roster. So far, the system is reported by those monitoring it to be working smoothly.

The system marks the first phase in a bigger plan to clear more over-the-counter products through central counterparties, a focus of the Bank of Canada as it tries to make the financial system in the country more stable.

In the financial crisis, banks stopped lending to each other through over the counter repo trades, largely because of concern about counterparty risk. That created problems in the bank funding market. With TMX Group Inc.-owned CDCC now standing in the middle, the belief is that should be less of a risk.

The repo system's ramp up will be closely watched in fixed-income markets. There were plenty of expensive lessons learned in the long process of building the system from scratch, as detailed in a previous post here .

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Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 4:00pm EDT.

SymbolName% changeLast
X-T
TMX Group Ltd
-1.98%35.73

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