12 July 2017
Reporter: Drew Nicol

CCP use on the up, says ECB

Central counterparties (CCPs) are becoming more attractive for securities financing transactions (SFTs), according to a European Central Bank (ECB) survey.

Banks reported that the use of CCPs had increased between March and May for many types of collateral and both average and most-favoured clients.

However, the use of CCPs remained basically unchanged only when convertible securities, equities and asset-backed securities were used as collateral.

The survey focused on credit terms and conditions in euro-denominated SFTs and over-the-counter derivatives markets.

Survey results revealed an increased use of CCPs and growing demand for both funding collateralised by equities and for longer term funding collateralised by domestic government bonds.

A further deterioration in the liquidity and functioning of the market for domestic government bonds was also reported.

According to the ECB, there was only small changes in liquidity and functioning for other asset classes covered by the survey during the March to May reference period, compared with the more significant deteriorations reported over the past two years.

The results of the ECB’s quarterly survey are based on responses from a panel of 28 large banks, comprising 14 euro area banks and 14 banks with head offices outside the euro area.

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