MTS Introduces Internet for Repo as Innovations Lead to Growth

Rome, 22 March 2006

MTS S.p.A. is pleased to report growing repo volumes and to announce the introduction of Internet access for its Money Market Facility (MMF). The secure Internet link addresses the needs of a number of financial institutions, which have expressed strong interest in trading the full range of European repo products via a light technical solution.

Internet access follows on a quarter of technical and market innovations commencing with the launch of the new MMF Repo market in September 2005, which has markedly improved flexibility for market participants. The introduction of such functionalities as: (i) Request-for-Quote (RFQ), which is a direct negotiation tool for traders within the normal trading environment, (ii) broken date maturities, and (iii) integrated order books for classic and buy/sell-back repos have provided for enhanced liquidity. The innovative RFQ messenger tool is now responsible for daily transactions of more than €3 billion and these volume levels continue to grow.

In addition, a rapid expansion of Central Counterparty (CCP) membership in Italy to a current total of 28 members has seen volumes cleared via the CCP service now account for more than 50% of all repo market transactions. Meanwhile, technical innovation and structural market changes have led to a situation where over 90% of all repo activity on the platform, both CCP and bilateral, is currently conducted on an anonymous basis pre trade. This growth in anonymous trading is reflective of the increased flexibility ensured by the presence of the combined central counterparty service offered by LCH.Clearnet & CC&G, the development of which has been strongly supported by MTS.

As a result, MTS’s repo market has experienced an increase of more than 20% in nominal volumes during the first quarter of 2006 compared with the corresponding period in 2005, while the growth in term-adjusted repo volume proved even higher. This surge reflects an increase in the average duration of trades performed and steady growth in repo transactions across all European collateral, making MMF Repo the market of choice for its 168 participants.

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