The sophistication and breadth of repo data is growing to support electronic trading, internal processing, government oversight, and a range of investment models worldwide. A new white paper from Finadium, Building Out Repo Data for New industry Needs, is a deep dive on the sources and uses of US repo data, including a look at future requirements. Get the report here.
The diverse US repo market generates substantial data points across electronic and manual, CCP and tri-party, and bilateral self-settled markets. However, there is as yet no golden source of data that the market can refer to for common agreement on CUSIP-level activity. As the use of repo data expands across repo desks, treasury, operations and the broader investment market, and new sources of repo data emerge, a structured, organized dataset that captures multiple US repo market segments will be essential for industry growth and regulatory comfort.
The next few years are expected to see a growth in digitization, automation, and maturity in the capital markets industry, and repo will be part of this evolution. The needs for repo data could extend far beyond what the market sees today as repo inputs are used for a variety of buy-side and sell-side analytics, not to mention smart contracts and digital ledger representations of physical repo transactions. It is difficult to imagine just how broad this expansion could reach, but a look at what is happening today seems almost exponential compared to the use of repo data just a few years ago.
The growth of electronic trading platforms and post-trade electronic processing is driving a need for data and producing more data in return. While client pricing on high value trades is still dependent on relationships, a new element of commoditization has become a healthy part of the business, including pricing based on whether the transaction is processed bilaterally or novated on a CCP. Better data leads to better automated decision making and becomes a virtuous cycle: structured repo datasets encourage electronic trading and the use of clearing and settlement utilities, which in turn helps improve data for pricing, risk management, and liquidity.
Going forward, the market will need not just more data, but well structured, organized datasets that all participants can agree on as a true representation of the US repo markets.
The full report, Building Out Repo Data for New industry Needs, is available at https://finadium.com/wp-content/pdfs/finadium-dtcc-building-out-repo-data.pdf
This report was prepared in collaboration with DTCC Data Services.