The European repo market is now worth well in excess of EUR 4.8 billion in terms of deals outstanding. Repo is already one of the fastest growing sectors of the international capital market with further spectacular growth expected.

The International Capital Market Association’s semi-annual survey of the repo market in Europe shows the total value of repo contracts outstanding on the books of the 61 institutions who participated in the latest survey was EUR 4,868 billion, compared to EUR 4,633 billion in December 2008 and the peak of EUR 6,775 billion reached in June 2007.

Repo is the essential financing tool which effectively underpins capital market operations by funding bond positions in the wholesale capital markets, which in turn are used for hedging and arbitrage strategies against derivatives. TRAX now offers both the buy and sell side access to full repo matching capabilities with the introduction of our new Fund ID database.

Although the headline number grew by 5.1%, a comparison of the aggregate returns from a constant sample of institutions showed growth over the last six months to be 1.3%. There was an increase in the number of banks reporting growth in their repo books, but the recovery in overall market activity was held back by continued deleveraging by other banks and possibly by the impact of mergers between large banks. Electronic trading consolidated the advance seen in the last survey, increasing its share to a record 28.5% from 28.0%.

Alternative data sources

• Click here to view copies of recent repo surveys
• Click here to view our most recent repo trade statistics
• Click here to download a copy of our repo paper
• Click here to contact our sales team about our repo solution

Market Developments

Commenting on the figures, Godfried De Vidts, Chairman of ICMA’s European Repo Council (ERC) said: “The European repo market has demonstrated its inherent stability in difficult times in spite of a fragmented settlement infrastructure, in contrast to the repo market in the US where gaps in the infrastructure have contributed to greater fragility. The current survey suggests that volumes in the repo market have stabilised following the shock of Lehman’s collapse last year, although growth continues to be limited by the banks’ requirement for financing. We anticipate that as central banks scale down their efforts in support of the financial market we will see increased activity in wholesale repo. In line with the EU Commission work on clearing and settlement, many improvements can still be made to provide a better infrastructure for the product. The ERC continues to focus on the development of financing tools in co-operation with the triparty agents and CCPs in Europe that should result in a better use of resources.”

Repo Trading Solution

In this high growth, fast paced market Repo is still traded in large volumes over the counter (OTC) which can lead to increased levels of operational risk through human error, delayed settlement and verification. The necessity for an integrated and streamlined electronic matching system can not be over stated.

Godfried De Vidts, Director of European affairs at ICAP and Chairman of ICMA’s European Repo Council (ERC) commented: "Any time an instruction fails in the chain of events it requires somebody to intervene manually. Matching repo trades through TRAX version 2 will decrease costs, especially in the back office”. TRAX has been built to meet the needs of the repo market by including full repo trade matching capabilities amongst other new functionality for the European Repo Market.

Repo White Paper

Learn more about our solution by downloading our whitepaper, click here to obtain a copy