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Eurex Repo, the electronic repo market of the international derivatives exchange Eurex, continues to grow in the first eleven months of 2006: average outstanding volume reached a new peak of more than € 93 billion at the end of November, beating the figure recorded at the beginning of the year by 18 percent. The Euro repo market saw particularly strong growth during this period: with a daily outstanding volume of over € 55 billion, this market set a new record in November, up by nearly 80 percent on the start of the year. In addition, ten new participants were admitted to the Euro repo market in 2006, including 7 international institutions. This brings the total number of participating institutions to 45. Average outstanding volume on the CHF repo market totaled CHF 63.7 billion (€ 42.5 billion) in November.
Euro GC Pooling, which was launched in March 2005, has played a key role in the success of the Euro repo market. This product is being enhanced in cooperation with Clearstream Luxembourg and Eurex Clearing AG, meaning that the international securities held in custody with Clearstream Luxembourg should also be available for Euro GC Pooling transactions from mid-2007 onwards. This offering is aimed primarily at international participants who use Clearstream Luxembourg as custodian for their securities.
Eurex Repo also expanded its product range on the Euro repo market by adding new baskets of European government and corporate bonds in the middle of December. This is the first time that corporate bonds have been available as collateral in electronic repo trading using a central counterparty. The implementation of the Basel II guidelines into national law in 2007 means that the financial industry expects to see an increased demand for collateralized financing alternatives, a development which is likely to benefit repo trading on the Eurex Repo markets.
“Repo” (repurchase agreement) refers to borrowing via the sale of an asset (usually a high-quality fixed-income security). The importance of repo transactions conducted via electronic trading platforms is growing, as the transactions increasingly displace unsecured loans with terms of less than one year in interbank trading. Repos eliminate default risks by means of collateralization with fixed-income securities, and offer lower costs in terms of capital requirements.
Eurex Repo (www.eurexrepo.com) ranks among the leading markets for electronic repo trading and operates the CHF and Euro Repo Markets. The Eurex CHF Repo Market was launched in 1999, and the Euro Repo Market followed in 2001. 180 participants from 9 countries are currently admitted to trading on Eurex’s repo markets. Eurex Repo is a 100% subsidiary of Eurex.
