The European Central Bank published the June 2026 results of its Survey on credit terms and conditions in euro-denominated securities financing and OTC derivatives markets, covering changes between March and May 2026. The survey found that overall credit terms eased slightly across all counterparty types for a second consecutive quarter, but only through modest easing in price terms, while non-price terms were unchanged. Looking ahead to June to August 2026, respondents expected conditions to remain broadly stable, with only a slight tightening in price terms anticipated for banks and dealers. The survey was based on responses from 26 large banks. In securities financing, funding rates and spreads increased across all collateral types and demand for funding rose across nearly all categories, particularly equities. At the same time, the maximum amount and maturity of funding declined on balance for most bond collateral, haircuts were mixed, use of central counterparties increased slightly, and liquidity in collateral markets deteriorated slightly for equities and some corporate bond segments. In non-centrally cleared OTC derivatives, initial margin requirements increased slightly for most derivative types, reversing the marginal decreases seen in the previous quarter, while maximum exposure rose slightly for interest rate, credit and equity derivatives. Liquidity and trading conditions deteriorated slightly for foreign exchange, equity and commodity derivatives, the volume of valuation disputes increased in both securities financing and several OTC derivatives segments, and terms for new or renegotiated master agreements eased slightly. Separately, respondents reported slightly greater focus on managing concentrated exposures to banks, dealers and central counterparties, alongside a small increase in hedge funds’ use of leverage and available unutilised leverage.
European Central Bank2026-07-24
European Central Bank survey shows slight easing in wholesale credit terms, while securities financing rates and OTC margins rise
The European Central Bank’s June 2026 SESFOD found that overall credit terms in euro-denominated securities financing and OTC derivatives eased slightly between March and May 2026, driven only by modest easing in price terms. Securities financing became more expensive as funding rates and spreads rose across all collateral types and demand increased, while non-centrally cleared OTC derivatives saw slightly higher initial margin requirements and some deterioration in liquidity for foreign exchange, equity and commodity products. Respondents largely expected conditions to remain unchanged in the next three months.