Following the Milan edition of Euronext’s European Repo Roadshow; the third stop in a series of industry gatherings delivered in partnership with Absolute Collateral, Alessio Mottola reflects on the role of Italy’s repo market, the forces reshaping collateral and clearing, and why market infrastructure will be central to Europe’s next phase of growth.
Along the way, he draws a personal parallel between his own weekly journey across Rome and Milan, and the path of the Italian government bond itself.
Italy as a lens for Europe’s repo market
Italy is a natural place to start. It is home to one of Europe’s deepest and most sophisticated repo markets, built around the liquidity of BTPs. In many ways, it offers a clear view of where European repo is heading.
For much of its history, repo was considered market plumbing: invisible when it worked, and deeply consequential when it did not. That is no longer the case.
Repo has moved from the back office to the strategy table. It is where the liquidity of a sovereign bond market is supported, financed and, ultimately, tested. In Italy, one of the largest government bond markets in the world, that role is systemic.
There is something quite remarkable about how the Italian market is built. The life of an Italian government bond is a journey across two cities. It is conceived in Rome, at the Treasury, where issuance is decided. It is then born in Milan, issued and dematerialised at Euronext Securities. It travels back to Rome, where it is traded on MTS and cleared through Euronext Clearing. And it returns to Milan, to be settled and held in custody.
Rome, Milan, Rome, and back to Milan.
I know that journey well. My own working life moves between those same two cities every week. So, in a way, I keep Italian government bonds very good company!
Beneath this quirky analogy is a serious point. Trading, clearing, settlement and custody sit within a single group, across two Italian cities. That connection is not an accident of history. It is what allows infrastructure to absorb complexity on behalf of the market, rather than passing that complexity on to participants through fragmented and disconnected processes.
Three forces reshaping repo and collateral
As we look ahead, the next phase of the repo market will be shaped by three structural forces. Importantly, these forces are no longer reshaping repo and collateral as separate topics. They are bringing them closer together.
1. Collateral is more available, but pressure remains
For much of the past decade, the challenge was scarcity. The ECB’s asset purchase programmes held a significant share of European sovereign bonds, making high-quality collateral harder to access. Today, we have moved beyond that acute phase. Quantitative tightening is gradually returning collateral to the market, central bank reinvestment is being reduced, and governments are issuing more.
Collateral is becoming more available. But more collateral in the system does not mean less pressure. Capital and leverage rules continue to make every unit of balance sheet more expensive to hold.
The question has therefore changed. It is no longer simply: “Where do I find collateral?” It is: “How do I mobilise, allocate and reuse the collateral I have as efficiently as possible, without inflating my balance sheet?”
Scarcity was a supply problem. This is an efficiency problem. And efficiency problems are infrastructure problems.
2. T+1 is a liquidity event for repo
In October 2027, Europe, the UK and Switzerland will move to T+1 settlement on the same day. For repo, much of the market will effectively compress towards T+0. This is not just a settlement change. It is a liquidity event for the repo market.
The industry is already working through the technical answers, but the structural direction is clear. The infrastructure supporting repo will need to absorb more pressure, so that market participants do not have to.
3. Tokenisation must be driven by real use cases
If T+1 compresses time, tokenisation asks what happens when time is compressed all the way to zero: atomic settlement, collateral moving in real time across venues and borders, and many of today’s frictions reduced or removed.
The promise is real. But we should be clear: we do not build technology because it is fashionable. We build it when our clients confirm that they need it. Tokenisation will matter to this market, but it will matter on the market’s timetable, driven by real use cases rather than hype. That discipline is part of what it means to be a mature market infrastructure.
So why start with Italy, in a conversation that is increasingly international?
Because the Italian market is where these forces are already visible. And because Italy’s repo market is increasingly inseparable from Europe’s.
A BTP financed in Milan today is collateral that can move across borders tomorrow. An investor in Frankfurt, Paris or Singapore holding Italian paper needs that paper to be financeable, mobile and efficiently cleared, wherever they sit.
The growing connection between the Italian repo market and the broader European landscape is not an aspiration. It is already happening, transaction by transaction.
That raises a question that goes beyond Italy: what do these forces ask of infrastructure?
They ask infrastructure to do more, so that participants can do less.
Value is moving towards the infrastructure that can support the greatest netting opportunities, margin most efficiently, and mobilise collateral at scale. This is why clearing, once seen primarily as a risk story, is now also a story about efficiency, funding and market access.
The infrastructure that defines the next phase will be the infrastructure that absorbs complexity on behalf of the market, rather than passing it on.
Building Europe’s next phase of repo and cash bond clearing
A deep, efficient European repo market is not a technical nicety. It is a precondition for the strategic autonomy of European capital markets.
If Europe wants to fund itself effectively, attract global capital, and stand as a genuine third pole alongside the US and Asia, then the foundations of the market need to be world-class.
Collateral needs to move. Liquidity needs to be available when it is needed. Clearing needs to support efficiency, resilience and scale.