Money market and repo platforms see big volumes; MTS widens footprint

Dan Barnes
Fabrizio Testa, CEO, MTS Markets

The European Central Bank estimated turnover in wholesale unsecured money markets in Europe alone was €127 billion (US$137 billion) per day in Q1 2020. The need for short-term financing in the March liquidity crunch boosted volumes for electronic trading in the money market and repurchase agreement (repo) space.

Market operator Tradeweb reports its average daily volume for repo (ADV) in Q1 was US$256 billion, up from US$192 billion in Q1 2019, an increase of 33%, while April continued to see heightened activity, with ADV up 18.7% year-on-year (YoY) to US$223.1 billion.

Bilateral repo activity continues to grow, and the firm reported that it added new dealers and participants.

Instimatch Global, the digital platform for money markets saw a huge spike in volumes during the crisis – up five-fold in April to over US$4.04 billion, compared with pre-Covid run-rate. The firm ascribed this to several factors including an immediate need for liquidity and a desire for counterparty risk diversification which the platform facilitates.

The company, which launched in 2017, now has 100 institutional clients in 15 countries, floowign its recent expanding into the Gulf earlier in 2020.

A new entrant into the electronic money market space is MTS, part of London Stock Exchange Group, which has launched MTS Depo, a new electronic multilateral exchange system for European unsecured money market trading denominated in Euros.

Trading has already begun with an overnight transaction executed between two Italian banks. The new trading platform was launched in response to growing demand from money market traders for access to more diverse forms of funding, while enabling participants such as corporate treasurers to achieve a return on capital. MTS Depo is available to all users of MTS Repo and can be accessed by dealers in Eurozone countries.

MTS Depo allows participants to negotiate short term borrowing and lending with flexible trade terms ranging from overnight to one year. It provides multiple trading protocols including a central limit order book and bilateral trading functionalities.

Fabrizio Testa, CEO of MTS Markets, said, “MTS’s Repo markets have gone from strength to strength, with record volumes last year. However, our clients were keen to be able to deploy the same flexible technology solutions and gain efficiency in the unsecured money markets as well. There was a clear demand from both our clients and the broader market for the same approach to be brought to the cash deposit market, and we have responded. MTS Depo now provides traders with access to a wide market of participants, flexible trading options and reliable post-trade services.”

©The DESK 2020