European repo trading volumes hits record in Q1, BrokerTec says

European repo trading volumes rose to a record high during the first quarter as the region saw unprecedented government debt issuance, trading platform BrokerTec said on Wednesday.

Euro and sterling-denominated dealer-to-dealer repo transactions, where borrowers offer government bonds and other high-quality securities as collateral to raise overnight cash, reached a record average daily volume of 286.7 billion euros ($340.91 billion), BrokerTec, part of US exchange operator CME Group, said.

An all-time high daily nominal volume of 338.8 billion euros on March 1 eclipsed the previous daily record set on March 11 last year, BrokerTec said, when financial markets panicked at the height of the novel coronavirus outbreak.

It has been a record quarter for European fixed income trading overall, as government bonds and credit assets also reached record average daily volumes, data released by Tradeweb, another platform, showed on Tuesday.

Government bond issuance, which supports trading volumes, began the year with a record, driven by higher borrowing needs because of the pandemic and investors' enthusiasm to buy the debt because of the European Central Bank's pandemic bond buying.

"As market participants continue to seek the efficient deployment of cash and capital through secured borrowing and lending in the sovereign bond markets, as well as the broader benefits of trading electronically and anonymously, we anticipate this increased activity and customer participation to continue in the weeks and months ahead," John Edwards, global head of BrokerTec said in a statement.