Jun 09, 2026
Eurex | Eurex Clearing | Eurex Repo
Liquidity: The underrated asset class in the portfolio
First published in German on DerTreasurer.de and in Dutch on PensioenPro.nl
In times of economic uncertainty, reverse repos offer a secure, flexible and profitable alternative to traditional bank deposits for excess liquidity.
A reverse repo is essentially a secured loan. An investor lends money to a bank at a fixed interest rate (repo rate), usually for a short term. As collateral, the investor receives high-quality securities, typically top-tier government bonds. If the borrower defaults, the investor can sell the collateral. At the end of the term, the borrower buys back the securities, thus repaying the loan amount plus interest. The European repo market, with a volume of over 12 trillion euros (source: ICMA European Repo Market Survey, as of June 2025), is a central component of the financial system.
Security through Central Counterparties
To maximize security and efficiency, many repo transactions are processed through highly regulated central counterparties (CCPs), such as Eurex Clearing AG. The CCP acts as an intermediary between the buyer and seller, replacing direct counterparty risk with its own, significantly lower default risk. Thus, cash investors have an advanced level of certainty of getting their capital back at the end of the term, even if the original trading counterparty defaults. Further advantages of CCP clearing include automated and smooth settlement, a standardized legal framework that eliminates the need for bilateral negotiations, and reduced effort in counterparty due diligence.
Flexibility and attractive returns
Parameters such as trade term, investment amount, and currency can be individually tailored to the investor's needs. At the same time, they allow for the same-day investment of funds or the short-term liquidation of long-term investments. Repo transactions offer attractive interest rates. Short-term repo transactions currently trade 1–3 basis points above the ECB's deposit facility rate (as of May 2026: 2.00 percent) and thus significantly above the unsecured benchmark €STR (as of May 2026: 1.93 percent). This enables investors to achieve an additional return with higher security, even after deducting costs for securities settlement and safekeeping.
Advantages over other investment forms
- Over bank deposits: In contrast to unsecured deposits above the deposit insurance limits, reverse repos offer structurally superior protection through collateralization and the CCP.
- Over direct investments in bonds: The term can be precisely matched to one's own cash flow, which is hard to meet with bonds that have a fixed maturity.
- Over money market funds: Investors have full control over their investments and avoid risks such as "gate risk" (suspension of share redemption).
Direct market access for buy-side firms
Eurex Repo, a subsidiary of Deutsche Börse Group, offers direct access for non-financial corporations with its "Select Invest" model. They act as direct trading participants, process their transactions electronically and benefit from a straightforward process in which Eurex Clearing acts as the CCP. In this model, there are no trading and clearing costs for the cash investor.
Centrally cleared reverse repos thus strike the balance between security, flexibility and return, making them a strategically valuable addition to liquidity management.
Also, read the complete guide to centrally cleared reverse repos at eurex.com/select-invest. If you are interested in our webinar on this topic in September 2026, please register here Select Invest Webcast Registration.
