Hedge funds warn Bank of England repo reforms may worsen market stress

A hedge fund industry group has cautioned the Bank of England over proposed reforms to the gilt repo market. AIMA warned that wider central clearing and other planned changes could reduce liquidity and heighten vulnerability to funding disruptions during market stress periods.

The reforms are intended to strengthen market resilience, but the hedge fund association has raised concerns about unintended consequences that could exacerbate volatility when market conditions deteriorate.