The European repo market grew 19 percent in the year to June, with 4.5 trillion euros of contracts outstanding mid-year, a survey by the International Securities Market Association (ISMA) showed on Thursday.
Most of the growth came in the first half of 2004, reflecting a rebound of activity in fixed income trading after a slowdown in the second half of 2003.
The trade association said the survey of 81 financial institutions showed repos were one of the largest financial markets in Europe.
Repo contracts, or repurchase agreements, involve investors stumping up securities, usually government bonds, as collateral for loans at a specified rate - the repo rate. The higher the demand for the security the better the rate obtained.
For the first time, the semi-annual survey now into its seventh edition, included figures on repo turnover supplied directly by automated trading systems in Europe.
The data showed that electronic platforms dominate trading at the very short end of the yield curve, where contracts have remaining terms to maturity of one month or less, while direct inter-dealer trading and voice brokers accounted for the bulk of longer-term and complex trading activity.
The repo market was making increased use of electronic trading, ISMA said in its report. Its market share rose to 24 percent in June, almost matching the volume that goes through voice brokers.
Comments
Comments are closed.