Europe’s Repo Market, Vital to Financial System, Is Shrinking
- Market contracted to $6.1 trillion as of June: ICMA survey
- Repo activity has been stymied by post-crisis regulation
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Europe’s market for borrowing and lending securities, a sector that’s vital to the plumbing of the global financial system, is shrinking, figures from the International Capital Market Association confirm.
The market for repurchase agreements fell to 5.4 trillion euros ($6.1 trillion) as of June 8, down 4.1 percent from December, according to ICMA’s survey of 63 financial companies, mainly banks. While the result was largely down to a drop in the number of industry participants, an analysis using a constant sample of respondents still showed a 1.6 percent year-on-year decline, confirming that “the overall trend for repo market activity continues to be downward,” ICMA said.