Omgeo, the global standard for post-trade efficiency, today announced significant growth in fixed income volume across its transaction services, including Omgeo Central Trade ManagerSM (Omgeo CTM) and Omgeo OASYSSM.
In 2011, Omgeo's total fixed income transaction volumes exceeded the previous year's by 21% globally, with 9.9 million fixed income transactions in 2011 compared to 8.2 million in 2010. This growth confirms the increased number of market participants embracing and adopting automated solutions in this area.
Specifically, Omgeo CTM, a central matching service for cross-border and non-US domestic trade processing, experienced a 38% increase in fixed income volumes overall, highlighting increased demand for automated central trade matching in a key asset class for firms globally. Regionally, the Americas experienced the highest growth rate in Omgeo CTM fixed income volumes at 85% year-on-year, which was closely followed by Asia at 69%. Europe continued to lead the way in total volume, processing almost 1.5 million fixed income allocations on Omgeo CTM in 2011 alone.
Harald Frodl, Head of Middle Office at Raiffeisen Capital Management Austria, stated, "The failure rate, especially for fixed income trades, used to be high. Thanks to Omgeo CTM, all transactions are now matched, controlled and booked the same day, with no errors. The rate of failed transactions has fallen below 0.01%."
During the past year, Omgeo further strengthened its fixed income capabilities in Omgeo CTM by adding support for specified mortgage-backed securities that were issued by Fannie Mae, Freddie Mac and Ginnie Mae. In addition, Omgeo added To Be Announced (TBA) coverage to support basic processing, with additional functionality, including the electronic matching of trade delivery stipulations, to be rolled out by end of 2012.
"TBAs encompass a significant proportion of the U.S. fixed income market and are second only to treasuries in terms of average daily trading volume," noted Kevin Arthur, Director of Fixed Income at Omgeo. "It is vital for firms like Omgeo to support the continued growth of the fixed income markets by providing fully automated post-trade processing solutions ts that allow companies to scale while standardizing their operations."
Omgeo OASYS, the company's U.S. domestic trade allocation and acceptance service, saw a 25% year-on-year increase in fixed income volumes, including notable growth in both money market securities and TBAs. Money market securities volumes grew by 62% while TBAs saw a 152% increase, demonstrating the increased demand for low-risk fixed income products in a volatile market. Other products experiencing strong growth in 2011 included convertible bonds (42% growth), mortgage-backed securities (30% growth) and federal agency securities (29% growth).
Omgeo ALERT, a web-based global database for settlement and account instructions (SI), automatically enriches Omgeo CTM and Omgeo OASYS with accurate and compliant SIs. As a result of the increased use of Omgeo CTM and Omgeo OASYS for fixed income transactions, ALERT also experienced a significant increase in fixed income instructions. Today, over half of all ALERT settlement instructions are fixed income.
According to Kevin Arthur, Director of Fixed Income Markets, "Omgeo's strong fixed income growth in 2011 underscores how factors such as market volatility and regulatory uncertainty are pushing firms to adopt automated middle- and back-office processes in instruments beyond equities. We anticipate the global fixed income markets will only continue to grow in 2012. As a result, these increased trade volumes will continue to push the case for greater levels of automation and reduced risk."