Euro area credit terms ease for securities financing, OTC derivatives

Overall credit terms and conditions for euro-denominated securities financing and OTC derivatives markets eased slightly between December 2025 and February 2026, reversing an expected tightening from the previous survey.

This easing, reported in net terms, primarily benefited banks and dealers.

Price terms eased across all counterparties except hedge funds, while non-price terms eased slightly for banks and dealers but remained unchanged for others.

The primary drivers for this easing included improved general market liquidity conditions, increased competition among institutions, and the strong financial positions of counterparties.

Survey respondents anticipate a further slight easing of funding conditions in the three months from March to May 2026.

Few significant changes were noted regarding concentrated credit exposures, leverage, client pressure, differential terms, or valuation disputes.

In securities financing markets, demand for funding increased across all collateral types.

Maximum funding amounts and maturities offered to counterparties rose, while haircuts remained largely unchanged.

Financing rates and spreads increased for most collateral types, reflecting higher demand.

For non-centrally cleared OTC derivatives, initial margin requirements saw a minor decline, and valuation disputes decreased.

Terms for new master agreements and non-standard collateral eased.

Compared to March 2025, overall credit terms for both securities financing and OTC derivatives were stable in non-price terms but tightened in price terms over the year.