just now
Instimatch Global, the digital platform for institutional short-term money market trading, has seen its volumes rise five-fold over the last two months, reflecting both short term conditions and an acceleration of underlying trends. Daily trade intent on the platform is now running at around $5 billion.
During April and May, many treasurers found market conditions hard to assess, with pricing shifting quite erratically at times, even for top-rated counterparties. Some treasurers urgently wished to maximise the liquidity they could secure, while others were pressed to deploy liquidity effectively. Last week the ECB reported that average daily unsecured borrowing in the Eurozone rose to €152 billion per day in the period 18 March-5 May 2020, compared with €127 billion in the previous monitoring period.
The short-term money market is unusual in remaining highly dependent on voice trading: ECB surveys suggest that bilateral direct trading via phone represents up to half the overall market in Europe, with voice brokerage taking 35%. Moreover, in the EU Single Market almost half of trades occur with both counterparties within a single country, reflecting lack of counterparty diversification.
The crisis conditions highlighted two trends leading to greater use of Instimatch Global’s digital platform. Firstly, some corporate and bank treasurers sought more actively to diversify funding sources and develop new counterparties. Secondly, with treasurers working from home, some seemed particularly open to innovation and improving workflow, wanting enhanced transparency in a more timely, efficient manner.
Daniel Sandmeier, CEO, Instimatch Global, commented: “April and May were no doubt exceptional months because of the market stress and the physical lockdown. But these conditions may have speeded up some longer-term trends in money markets. Transparency and counterparty diversification have become more important than ever. With treasurers at home, they are testing new ways of working – for many, seeing the market on a customizable screen with live market rates offers clear advantages, rather than having to make 20 phone calls. Some of these changes in how treasurers work could be for the long-term, just as in other fields.
“No doubt conditions will remain volatile and we continue to listen carefully to clients to tweak the platform to meet their needs. For Instimatch Global, the key point is because of the money market’s huge scale, a relatively small further shift to digital trading could have a powerful leverage effect for us.”
Since its launch in 2017, Instimatch Global has been at the forefront of disrupting the traditional ways in which money markets operate, attracting around 100 active corporates and banks from 15 countries across Europe and the Middle East to its trading network. By connecting borrowers with lenders within the huge unsecured money markets, the network provides more efficient access, better pricing and the ability to diversify counterparty risk. The firm won the Swiss Fintech Awards in March 2020 and has been shortlisted for the second year in the Financial News Trading and Technology awards.
