Growth for a constant sample of banks was 19% year-on-year, almost identical to the growth rate in the previous year (June 2003 to June 2004). Godfried De Vidts, Chairman of ICMAâs European Repo Council, welcomes this verification of the marketâs significance: "Despite a perceived slowdown in wholesale banking activities, the repo market has proved to be integral to core financing and has firmly stated its importance with yet another increase in outstanding volumes. As Basle 2 approaches, with its capital requirements affecting all banks in Europe, this trend to increased use of repo is set to continue".
This latest survey also shows that the market share taken by electronic trading was virtually unchanged at 21.2% compared to 21.3% in December 2004; however, in absolute terms, volumes traded grew by 14% over the six months to June 2005.
Generally, the structure of the repo market as indicated by the relative shares of different segments (e.g. currency, collateral and maturity distributions) remained similar to previous surveys. However, the share of government bonds in collateral issued in the EU fell to a record low of 85.7%, probably reflecting the growing role of credit repo in Europe.
Despite the positive trend demonstrated by this, and all previous ICMA surveys, significant obstacles to the continued growth of this important market remain, notably the lack of a uniform market infrastructure, highlighted by both Giovannini reports and by the EU Commission through the CESAME working group. Godfried Devidts commented: "The market and the European Repo Council have for years emphasised the gaps in repo delivery and settlement systems. These issues need to be resolved speedily with the co-operation of governments, central banks and EU institutions if the repo market is to contribute fully to the achievement of the goals laid out in the Lisbon agenda."