ECB published results of the June 2019 survey on credit terms and conditions in euro-denominated securities financing and over-the-counter (OTC) derivatives markets. The results of this survey are based on responses from a panel of 28 large banks, comprising 14 euro area banks and 14 banks with head offices outside the euro area. The results reveal that, in both the securities financing market and the OTC derivatives market, credit terms offered to counterparties eased for almost all counterparties between March 2019 and May 2019. The main drivers of this development include improvement in liquidity conditions and market functioning, stronger competitive pressures from other institutions, and increased balance sheet availability.
Looking ahead, a small net percentage of respondents expect price terms to continue easing for most counterparty types over the following three months. In line with the previous survey results, attention devoted by responding institutions to concentrated credit exposures to large banks and credit counterparties increased further in the review period. Regarding the provision of finance collateralized by euro-denominated securities, the maximum amount and the maturity of funding continued to decline, especially for funding secured with government and covered bonds. Financing rates or spreads also decreased for funding secured with many types of collateral—with few exceptions—and the demand for funding continued on a declining trend across all types of collateral. For non-centrally cleared OTC derivatives, conditions remain broadly unchanged.
The Eurosystem conducts a quarterly qualitative survey on credit terms and conditions in euro-denominated securities financing transaction and OTC derivatives markets. The survey covers changes in credit terms and conditions over three-month reference periods ending in February, May, August, and November. The survey questions are grouped into three sections counterparty types, securities financing, and non-centrally cleared OTC derivatives. The questions focus on how terms have tightened or eased over the past three months, regardless of longer-term norms, why they have changed, and expectations for the future. The survey focuses on euro-denominated instruments in securities financing and OTC derivatives markets.
Keywords: Europe, EU, Banking, Insurance, Securities, Survey Results, OTC Derivatives, Credit Terms and Conditions, Securities Financing Transactions, ECB
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