Xtrakter, the market utility, announced that TRAX the OTC matching system processed $11.5 trillion (€7.3 trillion) nominal value of repo transactions during Q2 2008. TRAX is the only fully automated repo (repurchase agreements) matching system available in the capital markets today.
Further analysis revealed repo trading values decreased by 22.3% ($ 3.3 trillion / €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 % ($2.5 trillion / €1.6 trillion)-Open repo decreased by 32.4 % ($66 billion / €41 billion)-Buy-Sell-Backs decreased by 9.2% ($0.8 trillion / €0.5 trillion)
Q2 2008 repo trades for this category were broken down as follows:
Open repo: $3.4 trillion / €2.1 trillionTerm repo: $138 billion / €88 billionBuy-Sell-Backs: $7.9 trillion / €5.0 trillion
Q1 2008 repo trades for this category were broken down as follows:
Open repo: $5.9 trillion / €3.7 trillionTerm repo: $204 billion / €129 billionBuy-Sell-Backs: $ 8.7 trillion / €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,” says Kevin Milne, CEO, Xtrakter.
TRAX processes approximately 5,000 repo trades a day with an average daily volume of $195 billion (€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.