Eurex, an online derivatives market, has launched a platform to trade euro-repos electronically.
A repo - a repurchase agreement - is the sale of securities by the security holder. But there is an agreement to repurchase the securities at an agreed price on a specific date which reflects the short-term repo rate.
Euro-repos will trade on the Eurex repo platform with German government bonds and jumbo Pfandbrief issues. These will act as general collateral for secured fund-raising as well as for special repos for lending and borrowing specific securities. Terms range from of 1 to 365 days.
Eurex is the first electronic market for repos which offers trading terms of one day for overnight business.
Rudolf Ferscha, Eurex CEO, says: "Eurex offers the entire range of products - from cash trading to futures and repos with terms of one day to 30 years. Eurex is the only exchange that offers clearing services for the whole fixed-income segment in addition to trading."
Trades will be settled through Eurex Clearing, which is the central counter-party for buyer and seller.
Eight banks are providing the liquidity needed for this market. They are Bayerische Landesbank and HypoVereinsbank in Munich, CSFB, Zurich and DG Bank, Deutsche Bank, Dresdner Kleinwort Wasserstein and Commerzbank, all based in Frankfurt, plus Westdeutsche Landesbank, Dusseldorf.