Repo trading decreases by 22.3% in Q2 08

11 July 2008

Xtrakter, the market utility, announced today that TRAX the OTC matching system processed USD 11.5 trillion (EUR 7.3 trillion) nominal value of repo transactions during Q2 2008. TRAX is the only fully automated repo (repurchase agreements) matching system available in the capital markets today.

Further analysis revealed repo trading values decreased by 22.3% (USD 3.3 trillion / EUR 2.1 trillion) in Q2 08 when compared to Q1 08. The difference in contract classes was as follows:

• Term repo decreased by 42.5 % (USD 2.5 trillion / EUR 1.6 trillion)
• Open repo decreased by 32.4 % (USD 66 billion / EUR 41 billion)
• Buy-Sell-Backs decreased by 9.2% (USD 0.8 trillion / EUR 0.5 trillion)

Q2 2008 repo trades for this category were broken down as follows
Open repo: USD 3.4 trillion / EUR 2.1 trillion
Term repo: USD 138 billion / EUR 88 billion
Buy-Sell-Backs: USD 7.9 trillion / EUR 5.0 trillion

Q1 2008 repo trades for this category were broken down as follows:

Open repo: USD 5.9 trillion / EUR 3.7 trillion
Term repo: USD 204 billion / EUR 129 billion
Buy-Sell-Backs: USD 8.7 trillion / EUR 5.5 trillion

“The decrease in repo trading values is in line with market expectations, Q2 has seen a decrease in trading within the market as a whole … concerns relating to counterparty risk and the value of contract assets is impacting on the amount of trading taking place,” commented Kevin Milne, Chief Executive, Xtrakter.

TRAX processes approximately 5,000 repo trades a day with an average daily volume of USD 195 billion (EUR 124 billion).TRAX processes both the near and far leg transactions as a single trade, allowing for improved tracking, reduced operational risk and a transaction fee reduction of 50% for subscribers.

Repo is still traded in large volumes over the counter (OTC) which can lead to increased levels of operational risk through human error causing delayed verification and settlement. TRAX allows firms to manage their operational risk effectively by matching trades which have been transacted OTC in all asset classes, in real-time with their counterparties, virtually eliminating failed trades at settlement.

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