Eurex Repo will extend the maximum term of tradable securities in markets such as GC Pooling and Euro Repo from one to two years. Effective Jan. 21, customers can use the long-term repayment option of the Long Term Refinancing Operations of the European Central Bank (ECB).
The extension coincides with the European Central Banks permission, effective Jan. 30, for banks for the first time to prematurely return LTRO liquidity, which they borrowed from the ECB in December 2011 and February 2012 with a maturity of three years. The fixed rate for the ECB loan is significantly higher than the current interest rate in the market.
In close coordination with our participants, we have realized this innovative extension within a short time frame. It is a reflection of market demand and will help banks to re-allocate their funding necessities to a cost-sensitive, secure and efficient alternative like our GC Pooling market, said Marcel Naas, managing director of Eurex Repo. The market consultation revealed that the current liquidity situation expressed by a flat yield curve shifts market activity significantly into longer terms, in the OTC markets especially into terms over one year, he added.