Bank of Canada Bolsters Repo Market Infrastructure

The Bank of Canada is upgrading its repo market operations to improve efficiency and flexibility. Starting in Q1 2027, the central bank will use TMX's Canadian Collateral Management Service for its repo operations. This move aims to enhance post-trade processing and give participants greater control over collateral management.

The upgrade also involves modernizing Canada's repo clearing framework to centrally clear most activity involving major buy-side and sell-side participants by 2028. The Bank will then use the Canadian Derivatives Clearing Corporation for its own repo operations.

Canada targets the overnight repo rate, which makes pressures in repo funding markets directly impact monetary policy effectiveness. The Bank uses CORRA, the Canadian Overnight Repo Rate Average, as a key gauge of these conditions and adjusts its policies accordingly.