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E-Trading May Cut Out Little Guys In Repo Mart

16 Jun 2005

A new electronic platform for triparty repurchase trades could further concentrate repo trading in the hands of the largest dealers.

A new electronic platform for triparty repurchase trades could further concentrate repo trading in the hands of the largest dealers. Thomson TradeWeb recently launched the first such trading platform to connect multiple dealers with buysiders. "[The platform] has the potential to further strengthen those dealers because middle and smaller dealers aren't on TradeWeb," said Mark Cartier, head of repo trading at Mizuho Securities.

The majority of repo trading is already controlled by the largest dealers who can provide the most liquidity. The new platform may even cut back on trading volumes for firms that stick with their own single-dealer systems, according to Harrell Smith, manager of the investments and securities practice at Celent, a research and consulting firm.

The original group of dealers is composed of J.P. Morgan, Deutsche Bank, UBS and Morgan Stanley. TradeWeb intends to roll out a version later this summer that handles triparty repos for agencies and mortgage-backed securities.

16 Jun 2005