The International Capital Market Association’s (ICMA’s) Global Repo and Collateral Forum (GRCF) and the Asia Securities Industry & Financial Markets Association’s (ASIFMA’s) Secured Funding Markets Committee have published the results of the latest survey of the Asia-Pacific repo market. It uses similar methodology to the established European repo market survey, released by ICMA’s European Repo and Collateral Council (ERCC), and this latest edition reports the outstanding value of repos and reverse repos as at June 14, 2023 with a detailed breakdown of those positions.
In broad terms, across the APAC non-Japan region, the survey reported $269.1 billion in outstanding value and an average daily turnover of $12 billion, compared with $310.0 billion and almost $43 billion per day in 2022. However, the survey size was reduced by the loss of previous participants rather than a contraction in the market.
The survey does not measure the size of domestic repo markets in the APAC region but cross-border business involving internationally active banks. While in previous years the survey has been split into two, one for trading in Japan and the other for trading elsewhere in the APAC region, the survey for 2023 covers only the APAC non-Japan region.
A main aim of the survey is to boost industry understanding of the structure of the cross-border repo market in Asia and changes in the composition of the flows.
Key survey findings:
- The survey suggested modest growth in the outstanding value of the ex-Japan APAC repo market but declining turnover which implies more longer-term transactions. This translated into a fall in the share of short-dates in favor of longer-term, open and forward repos.
- Tri-party and CCP-clearing repos played a small and diminishing role as repos tended to be cleared on a CCP after having been negotiated bilaterally between counterparties.
- Cross-border business with APAC and non-European counterparties increased its share of the survey, while there was a shift in the allocation of collateral into JGBs and some other APAC securities. This increase in JGBs helped to boost the share of government securities as the principal type of collateral in the survey.
- The US dollar remained the dominant currency in the survey. The Japanese yen took second place from the Australian dollar, in line with the shift in collateral composition.
- Transactions overwhelmingly remained in the form of repurchase transactions documented under the GMRA.
The survey includes a snapshot on China and India onshore repo market, highlighting the similarities and differences in composition and operating environment between domestic and cross-border markets, while ASIFMA’s member priorities provide a glimpse at how the survey results might evolve in the future.
ICMA chief exec Bryan Pascoe said in a statement: “Since 2016, this survey has served as a valuable resource, providing insights into the dynamics of the Asia-Pacific cross-border repo markets. We hope that work such as this will continue to benefit our members, authorities and regulators and other market participants in the region.”
“The ASIFMA/ICMA survey shows the growing importance of repo across the region and the dynamics of its structure and stakeholders,” said Philippe Dirckx, managing director and head of Fixed Income at ASIFMA, in a statement. “Parallel to the survey, this edition includes, for the first time, a snapshot of the onshore repo markets in China and India. We have also asked our members their priorities in markets they are operating in and the new APAC markets on their radar. This edition is therefore as much a state of play as a roadmap for the region’s key stakeholders.”