Electronic repo volume matches voice-brokered business

Electronic repo volume matches voice-brokered business

Growth in electronic repo trading accelerated in the six months to June 2004, and now accounts for 24% of total reported business in the EUR4.5 trillion European market, almost equalling the volume that goes through voice-brokers.

The semi-annual survey by the International Securities Market Association (Isma) is based on figures supplied by 81 participating banks. It estimates growth in the repo market at 19% year on year. Most of this growth took place in the six months to June, reflecting recovery in fixed income trading after a slowdown in the latter half of 2003.

The 24% automated dealing estimate includes electronic trading with known counterparties and anonymous deals conducted through a central clearing counterparty (CCP). Isma says the market share of repo deals transacted anonymously on an automated trading system rose sharply over the year to reach 11.6% in June.

For the first time the survey also includes figures on repo turnover supplied directly by the main automated trading systems in Europe. This additional data reveals that electronic systems dominate trading at the very short and more commoditised end of the market where contracts have remaining terms to maturity of one month or less, while direct inter-dealer trading and trading via voice-brokers account for the overwhelming bulk of longer-term and more complex trading activity.

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