–Steep Declines In OIS and Unsecured Activity, Survey Shows

BRUSSELS (MNI) – Turnover in the euro money market fell for the
third year in a row, according to a new survey released Thursday by the
European Central Bank (ECB).

Activity in overnight index swaps and the unsecured market posted
the steepest declines, the ECB said.

Aggregate turnover in the euro money market fell 3% in the second
quarter of 2010 compared with the same period a year earlier, according
to the survey of 105 credit institutions.

While that represents the third straight year of decline in money
market activity, the ECB noted that the pace of decline was lower. In
2009, turnover was 5% lower than the previous year, ECB data showed.

Activity in the overnight index swaps segment dropped 19% and in
the unsecured market activity was down 18% in 2Q 2010 compared to the
same period of 2009.

The data showed that borrowing and lending in the unsecured market
hit their lowest levels since 2000. In the secured market, borrowing and
lending levels remained relatively strong compared to past surveys.

“In the unsecured market the decline was most pronounced for
unsecured cash borrowing and, within this particular segment, for
maturities of more than one year and for maturities ranging from one to
three months,” the ECB said. It added that “the qualitative part of the
survey shows that liquidity conditions and efficiency in the unsecured
market continued to deteriorate.”

The central bank said the secured market “remained the largest
segment,” with turnover increasing by 8%.

Nearly all of the derivatives segments covered in the survey
experienced a decline in turnover in 2010, the data showed.

–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com

[TOPICS: MT$$$$,M$$FX$,M$$EC$,M$X$$$,M$$CR$,MGX$$$]