MTS’s Daily Repo Volumes Hit €175 Billion In Response To New Trading Innovations

The MTS Group is pleased to announce that its newly launched Money Market Facility (MMF) has further strengthened its position as the premier electronic repo market, with term-adjusted repo volumes reaching “highs” of up to €175 billion per day (single-counted). The depth of liquidity, which reflects the number of participants, continues to attract new members and, taking into account this year’s entrants, MTS’s repo community currently encompasses 172 participants. As a result, MTS, the sole Recognised Investment Exchange in European repo, represents the largest electronic repo market in terms of participants compared to any non Recognised Exchanges. Recent entrants include Bayerische Landesbank and Deutsche Postbank.

MTS’s migration to superior technology has led to significant improvements in the flexibility of its repo functionalities. These include the introduction of pre-trade anonymity for bilateral participants, in line with central counterparty (“CCP”) members, and a request-for-quote (“RFQ”) negotiating mechanism for Italian securities. These developments, in conjunction with the enhanced flexibility of the new platform, have served to stimulate interest in term markets and as such, average duration of repo trades conducted on MTS since September have increased by 14%. In addition, the MMF allows participants to execute all types of repo transactions via a single order book (i.e. buy sell back, classic repo, pension livrée) thus maximising liquidity while taking into account the specifics of each collateralised financing market in the eurozone.

The MMF is a unique hybrid model in that it offers MTS participants the choice to trade repo either via a CCP (anonymous) or bilaterally using the same order book. By way of example, German bonds traded via LCH Clearing are now included alongside the established bilateral business in order to provide a totally anonymous trading environment for such securities. Trading volumes in German securities have expanded 53% versus 2004 volumes accompanied by marked growth in all EU repo markets.

Central counterparty Italian repo volumes have risen by more than 200% during 2005, benefiting from an increase of 22 participants in CCP membership. Meanwhile, trading activity in Italian special repo among Primary Dealers (“Specialists” as defined by the Italian Ministry of the Economy and Finance) is currently limited to 28.83%, of which 13.5% are by non Italian Primary Dealers.

Gianluca Garbi, Chairman of the Management Board of MTS S.p.A., commented: "The recent introduction of the Money Market Facility underlines our commitment to the delivery of professional trading facilities and cost efficiencies across fixed-income markets. We are delighted by the positive impact this facility has had on the MTS repo market and we look forward to the development of further initiatives in order to address the ongoing requirements of repo traders. The extensive reach and range of participants together with the depth they provide and the transparency of our prices continue to sustain the benchmark status of our repo market.”