MTS launches direct electronic dealer-to-client trading in Repo Contracts

  • Delivers benefits of electronic repo trading to buy-side for the first time
  • Supports LCH Sponsored Clearing model for buy-side
  • Addresses growing collateral management and regulatory challenges including SFTR
  • Launch marks 20 years of repo market innovation for MTS

MTS, one of Europe’s premier fixed income trading venues, has unveiled new functionality that enables the trading of bilateral and centrally cleared Repo contracts between sell-side and buy-side participants for the first time, in collaboration with the launch of LCH’s Sponsored Clearing model from RepoClear.

Sell-side dealers have long benefited from the efficiencies of electronic repo trading. Now, as MTS celebrates 20 years of repo market innovation, its new Global Collateral Management (GCM) service will offer the same benefits to the buy-side. GCM combines the functionality and the technology of its established D2D Repo and D2C Cash platforms to create a dedicated new section on MTS BondVision.

Whilst electronic trading has evolved at pace in other areas of fixed income, trading flows in the dealer-to-client repo space have lacked innovation, with the majority of activity still passing through traditional manual channels.  

With a desktop presence at over 100 sell-side institutions via its MTS Repo platform, and over 400 buy-side institutions via its MTS BondVision platform for cash bonds, MTS identified a clear opportunity to leverage its unique position to facilitate electronic D2C repo trading.

By adding RFQ trading functionality to its existing Repo technology, MTS has enabled sell-side dealers to trade with buy-side clients using familiar protocols, existing connectivity and automated straight through processing (STP), requiring limited, or no development work on both sides.

Automated connectivity to LCH’s recently launched Sponsored Clearing model gives buy-side clients using this service, and the banks with whom they trade, the opportunity to offset and net balance sheet exposure improving access to liquidity whilst providing the added security inherent to CCP trading.

As part of London Stock Exchange Group (LSEG), and in anticipation of the Securities Financing Transactions Regulation (SFTR) expected in 2018, MTS has partnered with UnaVista, LSEG’s award-winning European Trade Repository, to further enhance the platform by providing a seamless solution enabling participants to meet their reporting requirements, if needed. UnaVista is an approved Trade Repository for the European Markets Infrastructure Reporting (EMIR) regulation and will be looking to provide a similar service for SFTR within their existing infrastructure.

Oliver Clark, Head of Product at MTS, comments: “MTS is uniquely positioned with a large universe of participants spanning sell- and buy-side institutions in the repo and cash bonds space.  By bringing these together for the first time, GCM is helping to mobilise cash and collateral to where it is needed.  In an environment where scarcity of collateral is increasingly an issue, and regulatory reporting requirements under SFTR are fast approaching the efficiencies that electronic trading brings are clear to see.”