ICMA's European Repo and Collateral Council publishes its analysis of the repo market at 2025 year-end
23 January 2026 ICMA’s European Repo and Collateral Council (ERCC) has published its latest annual analysis of how the repo market performed over the recent calendar year-end: The European repo market at 2025 year-end.
Calendar year-end remains a critical focal point for repo markets, reflecting the interaction between liquidity conditions, balance sheet constraints, and funding demand. Working closely with ERCC member firms, ICMA has assessed year-end market performance annually for the past ten years, following the severe dislocations observed during the 2016 turn. While those extreme conditions have not been repeated, the legacy of that period continues to shape how market participants anticipate and manage year-end funding risk.
The 2025 year-end occurred against a materially different backdrop from recent years. Ongoing quantitative normalisation, declining excess reserves, and increased government bond issuance shifted the year-end paradigm away from collateral scarcity and towards more traditional funding pressures. As a result, market expectations going into the fourth quarter centred on the risk of higher repo rates rather than the sharp rate compressions seen in prior years.
The report documents how term and forward markets initially priced in a meaningful year-end premium, particularly in the euro government repo market, reflecting concerns over limited dealer balance sheet capacity and competing demands from equity financing. However, as December progressed, these pressures eased. Ample liquidity, early prefunding by market participants, evolving bond market positioning, and the availability of central bank facilities all contributed to a relatively orderly turn, with only brief and contained volatility observed in the final days of the year.
While the analysis also covers repo market developments in GBP, USD, and JPY, the European experience remains central. A key conclusion is that balance sheet availability, rather than pure cash or collateral scarcity, continues to be the dominant and least predictable driver of year-end dynamics, a theme with important implications as markets move deeper into a post-QE environment.
The full report is available to download, and ICMA welcomes engagement from members and market participants on the findings and their implications for future repo market functioning.
