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 detailed overview of the secondary market for German Government securities.

The reported turnover of German Government securities and its components provide an insight into the secondary market structure.

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 bn vis-à-vis brokers corresponds to a € 22 bn 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 2018 vs. 2019

€ bn 2018 2019
(Gross) Trading volume 4,694 4,091
Net trading volume 109.6 120.1

In 2019, a total of € 4,091 bn trading volume was recorded, the lowest in a year since the statistics began in 2005. Compared with the previous year's volume, this represents a decline of more than € 600 bn or 13 %. The brief stabilisation trend of the last two years couldn't be continued.

Parallel to a higher issuance volume in 2019 the net trading increased to € 120 bn from € about € 110 bn in the previous year.

Funding tools 2019

Trading volume - Funding tools

Broken down by type of security, trading in Treasury discount paper (Bubill) in particular increased by 38 % or around € 32 bn to €116 bn over the year - the highest figure since 2016, and Federal notes (Bobl) were traded almost € 3 bn more.

All other Federal securities showed declining turnover. Gross trading fell most sharply for ten-year Federal bonds (Bund10) - by € 521 bn or a good fifth to the lowest value since the beginning of the statistics. Their percentage share in trading of all Federal securities falls by 4 percentage points to around 55 %, and their outstanding importance as the most active traded instrument remains undisputed. Federal notes (Bobl) only follow in second place with an 18 % share. Federal Treasury notes (Schatz) are traded third most intensively with a share of 13 %, their turnover decreases by 11 %, as is the case with 30-year Federal bonds (Bund30). The trading volume of inflation-linked Federal securities (ILB) falls by 7 %.

Gross trading (in € bn) 2018 2019
Bobl 749 751
Bubill 84 116
Bund10 2.751 2,230
Bund30 379 339
ILB 135 126
Schatz 595 528

Net trading volume - Funding tools

A comparison of the years 2018 and 2019 shows almost 50 % higher net purchases of Bobls (plus € 9 bn). With an increase of 44 %, net sales of Bund10 also developed extremely positively, although here the trend was contrary to that of gross trading. Bubills were still able to maintain their net sales volume compared to 2018 (plus € 0.3 bn).

By contrast, the sharpest decline in net purchases of 63 % (to € 1.7 bn), was recorded for ILB. Net purchases of Bund30 fell by 57 % - and thus also very significantly - to a net purchase volume of € 5.5 bn. The development of Schatz is striking: Although net issuance rose by 8 % on balance compared with 2018. However, this was only possible because weak demand in the first half of the year (- 38 % compared with the first half of 2018 to a level of € 8 bn) was overcompensated by very strong net demand in the second half (+ € 24.5 bn). With net sales in 2019 totalling € 32.5 bn, Schatz are once again the front-runner among Federal securities in this comparison.

Net trading (in € bn) 2018 2019
Bobl 18.7 27.8
Bubill 23.5 23.7
Bund10 20.1 28.9
Bund30 12.7 5.5
ILB 4.6 1.7
Schatz 30.1 32.5

Regions 2019

Trading volume - Regions

The geographical analysis of turnover in Federal securities reveals, only the euro area was able to record absolute growth of around € 30 bn in 2019. Its share in total trading across all regions even increased by 4 percentage points. Turnover here has been stable for five years at just over € 1 tn, and even higher before that.

In 2019, the counterparties from the rest of Europe (Europe ex euro area), which traditionally clearly dominate with a share of over 50 %, traded as little as never before since the statistics began. Compared with 2018, their turnover fell by € 443 bn or 17 % to € 2.2 tn. Trading with US counterparties fell the second most sharply, by € 152 bn or 21% to € 559 bn - after two historically active record years in 2017 and 2018 with a turnover of around € 710 bn each. Trading of Federal securities with Asia, the latter was replaced by America as the third most important trading region as early as 2012 and today does not even reach half of the American trading volume, also declined. In 2019, trade with Asian counterparts fell by € 30 bn to € 253 bn, the lowest figure since 2006, while trading with Arab counterparts fell from € 22 bn to € 15 bn, the most significant decrease in percentage terms (-35 %), although at a low level. At a negligible level, the volume of trade with Africa fell to a share of less than 0.1% of total trade.

Gross trading (in € bn) 2018 2019
Africa 2 2
America 711 559
Arabian countries 22 15
Asia 284 253
Euro area 1,012 1,042
Other Europe 2,663 2,220

Net trading volume - Regions

Net trading with America has always proved to be extremely volatile. In 2019, a significant increase from € 16 bn to around € 22 bn occured. This is the highest figure for this region since 2007 and the second highest of all regions in terms of net sales. In first place, with a very clear lead and an annual value of almost € 95 bn, comes the other Europe. It was almost always the strongest net buyer of Federal securities until 2015 when it was superseded by the euro area. The increase in trade in 2019 will amount to € 46.4 bn.

Investors from Asia, on the other hand, bought net as little as last in 2015 (at that time the region was even a net seller). A value of € 1.6 bn in 2019 means a decline of almost € 9 bn compared to the previous year. However, net sales fell most significantly in the euro area itself - by almost € 50 bn to now only € 2.1 bn, the lowest purchases since 2012.

Starting from 2014 at a level of € 7.1 bn, a negative trend in trading activities with Arabian counterparties emerged, which became significant net sellers in 2017 and 2018. In 2019 this trend was broken with minimal positive net purchases. Since 2015, net trade with African counterparts has been at a relatively insignificant level of less than € 1 bn, positive or negative.

Net trading (in € bn) 2018 2019
Africa 0.6 0.0
America 5.3 21.6
Arabian countries -8.4 0.0
Asia 10.2 1.6
Euro area 53.6 2.1
Other Europe 48.3 94.7

Institutions 2019

Trading volume - Institutions

In the analysis by counterparts, only Others managed to increase trading volume by 12 % and pension funds by 21 % to a level of around € 50 bn each.

On an annual basis, central banks traded Federal securities as little as never before. Having already reached a minimum in 2018, the trading volume fell again by 9 % to € 395 bn. Brokers also reached a new time series low of € 1,192 bn in 2019. Their turnover shrank by almost 15 %, as much as that of banks and asset managers. Trading of hedge funds retreated 10 % after the record turnover in 2018 of over € 370 bn.

Gross trading (in € bn) 2018 2019
Asset manager 1,334 1,138
Banks 1,037 896
Broker 1,397 1,192
Hedge funds 370 335
Pension funds 43 51
Other 42 47
Insurances 39 36
Central banks 432 395

Net trading volume - Institutions

In contrast to gross trading, central banks are among the winners in net trading. At € 70 bn, they were once again the strongest buyers and achieved the highest growth of all counterparties, too: € +15 bn - albeit starting from the time series low in the previous year. After 2018, hedge funds managed again to become the second most important net buyers, slightly ahead of asset managers, with just over € 29 bn - despite a decline in net purchases of € 11 bn, the most significant of all counterparties. In 2019 they thus reached their second-highest net purchase volume since the statistics began. Asset management counterparties, which have hardly been net buyers since the start of the ECB's purchasing programme (2016: € -3 bn; 2017: € +1 bn), returned to their former purchasing power in 2018 at € +35 bn and were the third most important net buyer of Federal securities. They maintained this position in 2019 with just under € 29 bn. Pension funds were the fourth most important counterparty in 2019 with net purchases of 4 bn Euros. This is € 5 bn more than in the previous year. The second-highest increase of € 14 bn in net sales was achieved by banks - but only to about € 1 bn. In 2019 they were thus only the fifth most important buyer of German Government securities. Even in 2017 there was still at least a positive balance in the same amount (14 bn), and in 2018 the first net sales since the statistics had begun were recorded. Others, i.e. private investors and industrial companies, reversed the negative net trading balance of € -1 bn from 2018 to € +1 bn in 2019. After strong net trading in 2016 and 2017, this is only 15 % of their three-year average.

Insurance companies conducted their first net sales of less than € 1 bn since 2012. In the previous year their trading balance was almost zero. Brokers reported their usual negative balance at the end of the year, which doubled from € -7 bn to € -14 bn - but this level isn't unusual.

Net trading (in € bn) 2018 2019
Asset manager 34.9 28.8
Banks -12.4 1.4
Broker -6.8 -14.6
Hedge funds 40.4 29.2
Pension funds -0.9 4.3
Other -1.1 0.7
Insurances 0.1 -0.4
Central banks 55.5 70.8