SECURITIES FINANCE

SIX Securities Services expands equity repo trading

SIX Repo has added two additional equity baskets and onboarded Natixis as a new repo trading counterparty.

By Joe Parsons joe.parsons@strategic-i.com May 08, 2017 10:57 AM GMT

SIX Securities Services has added two European equity index baskets to its repo trading platform, as it looks to meet increased demands for new types of collateral.

Through its business unit SIX Repo, it has added the CAC 30 and FTSE 100 for equity repo financing to its CO:RE trading platform for tri-party counterparties.

“Different banks and non-bank financial institutions in the repo market have an interest in taking in more equity as collateral due to its liquidity, availability and for the diversification factor. There is a clear trend for equity and fixed income financing desks to come closer together and work towards a more singular view of the available collateral pool,” said Nerin Demir, head of SIX Repo and securities finance, SIX Group.

The availability of high quality government bond collateral is being hit by European monetary policy. With the European Central Bank (ECB) sticking to its bond buying programme and withdraw government securities from the market, it has effectively reduced the volume of high quality securities to borrow, making it difficult for market participants to obtain collateral.

The addition of the new equity baskets to the SIX repo trading platform could encourage market participants to diversify their collateral, SIX hopes.

In addition, SIX has also added French bank Natixis as its latest tri-party counterparty to the platform.

“Easy to use, it [SIX] can cater for large volumes of transactions and is particularly supportive for equity repo transactions. We are looking forward to building balances and working with counterparties on CO:RE trading platform,” added Ian Beattie, head of client development, equity finance, Natixis.