ESMA publishes first overview of EU SFT markets
09 April 2024 Europe
Image: lexiconimages
The European Securities Markets Authority (ESMA) has published its first market report on EU securities financing transactions (SFTs).
The report contributes to ESMA’s financial stability objective by monitoring repo market developments and providing key risk metrics for its monitoring framework on SFTs.
The market authority says that the findings provide the “first comprehensive market-level overview of the EU repo market”, based on information reported by market participants.
The total outstanding exposure of SFTs were € 9.8 trillion in September 2023. Repos accounted for €6.7 trillion and securities lending accounted for €2.3 trillion.
One key area of focus in the report is clearing and settlement, where ESMA notes that 61 per cent of repo transactions are uncleared, with 55 per cent processed bilaterally and 6 per cent managed with a third-party.
Another area of focus is repo market participants. The findings show that banks are the major participants in repo markets, with 52 per cent of repo amounts, and that they are predominantly concentrated in just a few EEA jurisdictions.
France is shown as the primary domicile, holding 55 per cent of EEA repo borrowing and 53 per cent of EEA repo lending in September 2023.
ESMA reports that 41 per cent of the repo amounts observed are between EEA counterparties. Links with the UK are strong, with EEA repo borrowing from the UK amounting to 12 per cent of repo amounts, and EEA lending to the UK to 9 per cent.
The report contributes to ESMA’s financial stability objective by monitoring repo market developments and providing key risk metrics for its monitoring framework on SFTs.
The market authority says that the findings provide the “first comprehensive market-level overview of the EU repo market”, based on information reported by market participants.
The total outstanding exposure of SFTs were € 9.8 trillion in September 2023. Repos accounted for €6.7 trillion and securities lending accounted for €2.3 trillion.
One key area of focus in the report is clearing and settlement, where ESMA notes that 61 per cent of repo transactions are uncleared, with 55 per cent processed bilaterally and 6 per cent managed with a third-party.
Another area of focus is repo market participants. The findings show that banks are the major participants in repo markets, with 52 per cent of repo amounts, and that they are predominantly concentrated in just a few EEA jurisdictions.
France is shown as the primary domicile, holding 55 per cent of EEA repo borrowing and 53 per cent of EEA repo lending in September 2023.
ESMA reports that 41 per cent of the repo amounts observed are between EEA counterparties. Links with the UK are strong, with EEA repo borrowing from the UK amounting to 12 per cent of repo amounts, and EEA lending to the UK to 9 per cent.
NO FEE, NO RISK
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
