Going Secured

Trends in European bank-to-client secured money markets.

We examine developments in the European secured cash investment market between banks and their “non-bank” clients including insurers, pension funds, asset managers, mutual funds, hedge funds and corporates. The failures and near-failures of large financial institutions during the financial crisis increased the need and desire for risk mitigation by non-banks in money markets.

Secured cash investments, defined as cash-driven repurchase agreements through which non-banks provide cash in return for collateral such as government bonds from their bank, have grown substantially in all major European markets as a consequence.

The study identifies the drivers behind recent growth in secured cash investment markets, reviews developments in offerings, provides perspectives of non-bank and bank participants, and concludes with an outlook, summarising the key trends shaping the market. The study relies to a large extent on in-depth interviews with decision makers in the European money market industry. Interviewees were selected from across the bank and non-bank segments in order to develop a comprehensive picture of current and emerging market practices.

Going Secured