Secondary market structures

Secondary market data continuously transmitted through a representative part of the members of the Bund Issues Auction Group provide the Finance Agency and the participating financial institutions with an indicative overview of the secondary market for German Government securities.

The reported turnover in German Government securities provides an insight into the structure of the secondary market.

A representative share of the reporting member banks report their transactions in German Government securities on a voluntary basis – broken down by the type of security traded (Bubills, Schaetze, Bobls, Bunds and inflation-linked securities), region and the type of institution of the involved counterparty. The approximate structures of the secondary market can be identified on the basis of these trading volumes and net positions.

The gross trading volume is derived by adding up the reported sales and purchase volumes of the member banks. The net trading volume is the balance of sales minus purchase volumes.

The net positions show the trading position of the member banks after sales and purchases within one category have been balanced. Accordingly, for example a net position of € -22 billion vis-à-vis brokers corresponds to a € 22 billion higher volume of purchases by member banks from brokers than sales to brokers. These trading data are provisional since later submissions might lead to subsequent corrections.

Annual comparison of trading volumes 2016 vs. 2015

€ bn20152016
(Gross) trading volume4.7154,294
Net trading volume138,7146,7

In comparison with 2015 the gross trading volume decreased by nearly 9 % in 2016. Thanks to an exceptional fourth quarter the trading during second half-year 2016 almost reached the level of the first half-year.

Net trading summed up to € bn 147 in 2016 - after € bn 139 in 2015 and € bn 129 in 2014. Generally the net trading volumes are predominantly determined by the issuance volumes of the Federal Government securities during the corresponding time period.

Funding tools 2016

Trading volume - Funding tools

Broken down by instruments the trend of the comparison of the first half-years continued in 2016: The gross trading volume of short and very long term securities increased whereas trading in medium term maturities decreased. Accordingly the share of Treasury discount paper (Bubill) and Federal Treasury notes (Schatz)of overall gross trading increased by 0.5 percentage points. The share of 30-year Federal bonds (Bund 30) which had been issued in a significant higher volume in 2016 rose 1.5 percentage points. To the same degree there was a reduction in trading of 10-year Federal bonds (Bund10). Federal notes (Bobl) trading inched a percantage point lower. The share of trading volume of inflation-linked Federal securities (ILB) remained unchanged at around 4 %.

Gross trading (in € bn)20152016
Bobl786674
Bubill108120
Bund102,7112,401
Bund30376408
ILB193175
Schatz541515

Net trading volume - Funding tools

The most significant change similarly concerned the net trading of 30-year Federal bonds (Bund30). Accompanied by a 50 % higher issuance volume the trading volumes almosted doubled in 2016. Apart from that there were no substantial deviations from the 2015 numbers. The net sales of Treasury discount paper (Bubill) and of 10-year Federal bonds increased, too. The most visible decreases occured in net trading of Federal notes (Bobl).

Net trading (in € bn)20152016
Bobl32.129.2
Bubill21.322.9
Bund1030.735.2
Bund306.913.4
ILB5.95.4
Schatz41.740.5

Regions 2016

Trading volume - Regions

The geographical anaylsis reveals a slightly higher gross trading volume in absolute values just with counterparts from America. Compared to 2015 their share rose, similarly to that of counterparts from the euro area, more than one percentage point. However, 2016 the trading volume with counterparts from Asia and the euro area decreased by about one percentage point. Still by far the most important trading partners since data collection are Europeans from outside the euro area. These trading activities are mainly dominated by British financial institutions. The shares of trading with Arabian and African counterparts remained almost unchanged.

Gross trading (in € bn)20152016
Africa22
America485504
Arabian League1916
Asia376281
Euro area1,1341,089
Other Europe2,6992,401

Net trading volume - Regions

Although the high volume of net sales in 2015 recovered to a slight positive level in 2016, Asian counterparts didn't reach their former position among the most important net buyers of German Government securities. 'Traditionally' counterparts from Europe (without euro area) are the most active net buyers. However, their net purchases 2016 almost halved whereas the net purchases of counterparts from the euro area marked their second highest degree since 2005 by staying nearly at the same level as in the previous year. Again American counterparts sold large volumes on balance but to a smaller extent than in 2015. Countries of the Arabian League contributed the lowest net purchases since 2005.

Net trading (in € bn)20152016
Africa0.4-0.6
America-16.4-13.0
Arabian League2.90.5
Asia-59.41.9
Euro area88.889.1
Other Europe122.568.9

Institutions 2016

Trading volume - Institutions

In absolute numbers there was growing gross trading with hedge and pension funds while trading volume with all other counterparts decreased. Thereby hedge funds reached record level of 8 % in relative share of trading, adding almost three percentage points compared with the previous year. Asset managers added about one percentage point to 23 %. In contrast there was a striking shift of more than minus two percentage points to 21 % in trading with banks. In absolute numbers banks and insurance companies currently mark the lowest level of trading volume since start of the data collection. Since 2011 the formerly predominant banks hover around the trading level of asset managers. The proportion of gross trading of central banks remained unchanged at 14 %.

Gross trading (in € bn)20152016
Asset manager1,056988
Banks1,107892
Broker1,4471,337
Hedge funds247330
Pension funds4655
Other11079
Insurances3935
Central banks663579

Net trading volume - Institutions

As the most active net buyers of every year since 2006, the central banks bought 2016 by a wide margin the most Federal Government securities, too. Thanks to the Public Sector Purchase Programme of the ECB and the purchases from other European central banks their net volume soared by almost 60 % to more than € bn 138 up from € bn 87 in 2015. These are followed by banks with net purchases of € bn 26 (about 30 % less than 2015) and others with € bn 11. After net purchases of almost € bn 23 in 2015 the traditionally strong demanding asset managers sold 2016 on balance for the first time € bn -3. Hedge funds executed their highest net sales since recording of € bn -11.

Net trading (in € bn)20152016
Asset manager22.9-3.0
Banks37.226.2
Broker-9.0-15.4
Hedge funds-1.7-11.0
Pension funds2.30.3
Other-0.510.9
Insurances0.50.4
Central banks87.0138.4