Euro dealer credit terms eased for a fourth quarter, even after the ECB's June hike

Serguey Asael Shinder08 October 2026, 07:161 min read

The European Central Bank published on 7 October the results of its September 2026 survey on credit terms and conditions in euro-denominated securities financing and OTC derivatives markets (SESFOD). The survey asks 26 large banks — 14 in the euro area and 12 headquartered outside it — how the terms they offer changed between June and August 2026.

The headline. Overall credit terms eased slightly for all counterparty types, the fourth consecutive quarter of easing. That covers a period in which the ECB raised its key rates by 25 basis points in June and held them in July, amid uncertainty over the Middle East conflict and volatile energy prices. The easing came mainly through price terms; non-price terms eased slightly for banks and dealers, tightened slightly for hedge funds, and were unchanged for others.

Securities financing.

• Demand for funding rose against most collateral types, led by equities (a net 27% of respondents).
• Financing rates and spreads increased for most-favoured clients across all collateral types; for average clients, only for domestic and other government bonds and convertibles.
• Haircuts decreased for most bond collateral and asset-backed securities, and the maximum amount and maturity of funding rose for some collateral.

OTC derivatives.

• Initial margins declined slightly for foreign exchange, interest rate, equity and several credit derivative types.
• Liquidity deteriorated for equity and commodity derivatives, but improved slightly for credit derivatives on sovereigns.
• Valuation disputes increased in volume, duration and persistence for several types, particularly credit derivatives.

The reading. Dealers are charging their best clients more for funding — consistent with a higher policy rate — while asking for less collateral and offering more. The price of leverage went up; the quantity of leverage on offer did not shrink.