15 May 2017
London
Reporter: Drew Nicol

Global political turmoil driving bond trading


Geo-political events in the US and Europe were the most significant drivers of fixed income trading in the 12 months ending March, according to NEX Group.

NEX Group noted in its March-to-March yearly report that secondary market activity for European government bonds has steadily improved from the lows seen last year.

Trading activity remains concentrated around new bond issuance in addition to an uplift more generally in France and Holland in the run up to their elections.

The US presidential election produced the second highest recorded volume day at BrokerTec and speculation around Donald Trump’s policies also continued to drive heightened volatility.

NEX Group also highlighted the actions of the US Federal Reserve, which, while keeping interest rates on hold, has embarked on a measured agenda of raising rates providing trading opportunities.

As a result of the uncertain political landscape, fixed income and repo trading platform BrokerTec’s revenue increased by 17 percent to £155 million.

This performance reflects a 3 percent increase in US repo to $219 billion and a 6 percent increase in European repo to €186 billion, but a 2 percent decrease in US treasury average daily volume to $164 billion.

“The US repo product benefitted from the uptick in market volatility that began ahead of the Brexit vote and persisted through the US presidential election. Trading activity in the European repo market benefitted from increased volatility, demand for good quality collateral and a lack of supply from the buy side,” NEX Group stated.

Michael Spencer, CEO of NEX Group, said: “Our performance remains strong in a tough market environment. NEX Markets has focused on expanding its product suite to a wider client base and continues to win market share in US treasury actives, EU repo and Asian non-deliverable forwards.”

More news
The latest news from Securities Lending Times
Join Our Newsletter

Sign up today and never
miss the latest news or an issue again

Subscribe now
Pilot repo survey reveals Japan as regional activity centre
26 September 2017 | London | Reporter: Jenna Lomax
The survey, which was the first of its kind carried out by ICMA and ASIFMA, found the majority of repo collateral was made up of Japanese government bonds
Shadow banking will not be banned, confirms IMF
26 September 2017 | Helsinki | Reporter: Jenna Lomax
The IMF, along with the FSB and other regulatory bodies, have no desire to shut down the alternative financing industry but that some aspects of the market’s risk features must be managed
Hedge funds see record-breaking returns, says eVestment
26 September 2017 | Atlanta | Reporter: Jenna Lomax
Investors added an estimated $13.4 billion to hedge funds in August, bringing in more money than was spent, which lead total AUM to $3.2 trillion
Broadridge expands sec finance project team
25 September 2017 | London | Reporter: Drew Nicol
Broadridge has recruited Martin Walker as head of product management for securities finance and collateral management
US Volcker Rule not fit for purpose, says SIFMA
22 September 2017 | New York | Reporter: Drew Nicol
The US Volcker Rule is too broad, excessively complex, and uniquely prescriptive, according to the Securities Industry and Financial Markets Association
Pension fund mandate for BNP Paribas
22 September 2017 | London | Reporter: Drew Nicol
BNP Paribas has been appointed to provide global custody for £3 billion in pension fund assets for the West Sussex Pension Fund
Pirum joins South African securities lending association
21 September 2017 | Johannesburg | Reporter: Drew Nicol
Pirum Systems has joined the South African Securities Lending Association