Survey respondents reported less favourable price terms offered to counterparties across the entire spectrum of securities financing and OTC derivatives transaction types for the fourth consecutive quarter. Worsened general market liquidity and functioning, limited balance sheet availability to back up transactions and increased internal treasury charges for funding at the respondent’s institution were cited as the main reasons for the tightening of price terms. Survey respondents pointed to worsened general market liquidity and functioning, and lessened competition from other institutions as explanations for non-price terms becoming less favourable. Both price and non-price credit terms are expected to tighten further over the next three-month reference period from September 2015 to November 2015.
A reduction in liquidity was reported for nearly all asset classes covered by the survey and was mostly attributed to a reduced willingness on the part of banks to provide capital for market-making services as a result of either regulatory changes or changes in internal risk-management practices.
Full report 2015
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