European repo market size grows 10.9% YoY for June, says ICMA
31 October 2022 Europe
Image: natali_mis/stock.adobe.com
New figures have revealed an accelerated growth for the European repo market, which has reached a record high of €9,680 billion for 8 June 2022, a 10.9 per cent year-over-year increase.
The statistic highlighted in the International Capital Market Association’s (ICMA) European Repo and Collateral Council (ERCC) survey represents the total value of the repo contracts outstanding on the books of the 56 institutions who participated in the latest survey.
The 43rd European Repo Market Survey notes that the rise in the headline number compares to €9,190 billion in December 2021, representing a 5.2 per cent increase.
The figures follow a very similar rate of growth to those highlighted between the June and December 2021 repo surveys.
While headline numbers represent accelerating growth in the European repo market, the underlying conditions showed few major differences to the previous survey in December, according to ICMA.
A notable difference highlighted in the survey suggests that while the outstanding size of the market grew, there was a usual seasonal shortening of maturities in the survey as a whole, but there was “virtually no growth” in turnover in electronic trading.
This finding suggests smaller transactions or longer maturities in the latter market segment.
ICMA reveals that shorter maturities in the overall survey could reflect collateral scarcity, which would encourage shorter-term securities-driven repo. While longer maturities in electronic trading could reflect increased term trading in cash-driven repo in response to the further normalisation of interest rates.
The repo survey also notes an increase in the shares of floating-rate repos and in trading on automated trading systems (ATS), as would be expected in an environment of rising rates.
The statistic highlighted in the International Capital Market Association’s (ICMA) European Repo and Collateral Council (ERCC) survey represents the total value of the repo contracts outstanding on the books of the 56 institutions who participated in the latest survey.
The 43rd European Repo Market Survey notes that the rise in the headline number compares to €9,190 billion in December 2021, representing a 5.2 per cent increase.
The figures follow a very similar rate of growth to those highlighted between the June and December 2021 repo surveys.
While headline numbers represent accelerating growth in the European repo market, the underlying conditions showed few major differences to the previous survey in December, according to ICMA.
A notable difference highlighted in the survey suggests that while the outstanding size of the market grew, there was a usual seasonal shortening of maturities in the survey as a whole, but there was “virtually no growth” in turnover in electronic trading.
This finding suggests smaller transactions or longer maturities in the latter market segment.
ICMA reveals that shorter maturities in the overall survey could reflect collateral scarcity, which would encourage shorter-term securities-driven repo. While longer maturities in electronic trading could reflect increased term trading in cash-driven repo in response to the further normalisation of interest rates.
The repo survey also notes an increase in the shares of floating-rate repos and in trading on automated trading systems (ATS), as would be expected in an environment of rising rates.
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