Electronic repo trading on the rise, says Bruni
04 August 2017 New York
Image: Shutterstock
Interest in electronic repo trading is increasing as regulations make the business more expensive to conduct, according to Tradeweb鈥檚 managing director of European markets, Enrico Bruni.
鈥淢any factors鈥� 鈥� but particularly the new margin requirements for over-the-counter (OTC) derivatives鈥攁re driving the trend.
The rules, introduced by the Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO) that require non-cleared OTC derivatives business to post and collect initial margin, are 鈥渄riving dealers and clients to look for an electronic solution for repo trading鈥�.
It鈥檚 not just new regulations that are pushing the market toward electronic trading. The International Capital Market Association reported in June that the changing nature of the underlying market, with a trend toward smaller trade sizes and more rapid turn-over of dealer positions, is making sourcing supply more difficult.
鈥淏uy-side clients are facing increasing pressure to prove best execution, and to optimise the performance of their portfolios.鈥� said Bruni. 鈥淥n the sell side, firms have fewer resources at hand and are looking for efficiencies in order to sustain the business.鈥�
Bruni argues that historical repo trading resources have been detrimental to the industry but electronical repo trading 鈥渋s changing that dynamic.鈥�
The full interview with Enrico Bruni will be available to read in the next issue of Asset Servicing Times, published on 8 August.
鈥淢any factors鈥� 鈥� but particularly the new margin requirements for over-the-counter (OTC) derivatives鈥攁re driving the trend.
The rules, introduced by the Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO) that require non-cleared OTC derivatives business to post and collect initial margin, are 鈥渄riving dealers and clients to look for an electronic solution for repo trading鈥�.
It鈥檚 not just new regulations that are pushing the market toward electronic trading. The International Capital Market Association reported in June that the changing nature of the underlying market, with a trend toward smaller trade sizes and more rapid turn-over of dealer positions, is making sourcing supply more difficult.
鈥淏uy-side clients are facing increasing pressure to prove best execution, and to optimise the performance of their portfolios.鈥� said Bruni. 鈥淥n the sell side, firms have fewer resources at hand and are looking for efficiencies in order to sustain the business.鈥�
Bruni argues that historical repo trading resources have been detrimental to the industry but electronical repo trading 鈥渋s changing that dynamic.鈥�
The full interview with Enrico Bruni will be available to read in the next issue of Asset Servicing Times, published on 8 August.
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