Repo stable despite book decline says ICMA

Repo market stable despite decline of G-SIFI book decline.

The Repo market remains in a stable condition despite a reduction in repo books of Global Systemically Important Financial Institutions (G-SIFI) according to a survey by the ICMA.

In the results of its 30th semi-annual survey of the European repo market, which calculates the amount of repo business outstanding in December 2015, concluded that the repo market has remained flat at £5.6 trillion since July 2015.

In the survey, the IMCA puts this relative stability down to expansion of non-EU banks’ European repo books.

Decline in repo books of G-SIFIs was put down to the impact of new regulations impacting the repo market. Despite many banks already conforming to regulations concerning liquidity and leverage ratio, uncertainty remains about the impact of the Net Stable Funding Ratio.

Godfried De Vidts, Chair of ICMA’s European repo committee said: “This 30th European repo market survey is a continuation of ICMA ERCC’s commitment to providing authoritative data on secured repo/triparty markets.

“Given this long experience in collecting and interpreting data, we recommend caution with the forthcoming EU Securities Financing Transactions Regulation.”

“The authorities would be wise to start with carefully designed, clear and simple data requests. Inappropriate interpretations of data could result in mistaken policy interventions, so care is needed to evolve robust processes based on practical experience.”