Electronic trading picks up as repo market stalls

Electronic trading picks up as repo market stalls

The latest statistics on European repo trading from the International Securities Market Association show a continued migration to electronic systems in the six months to December 2002, despite a slowdown in market growth during the period.

The analysis is based on the value of repo contracts outstanding at 76 financial institutions on 11 December 2002.

At the time, the total value of outstanding contracts on the books of these institutions stood at EUR3377 billion, a growth rate of only 2.2% over the year to December 2002. By comparison, the year-on-year growth of this sample between June 2001 and June 2002 was 14.4%, showing that growth decelerated sharply in the second half of 2002 reflecting harsher market conditions.

The figures reveal an increased market share for electronic trading of repos, up from 12.7% of the total value of outstanding contracts in June, to 16.8% in December. Anonymous electronic trading of repos through systems that use central clearing counterparties also increased from 5.6% to 6.9% over the six-month period. The number of institutions in the survey using electronic systems for trading repo jumped to 48 from 39, and the number of institutions using anonymous systems to 35 from 21.

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