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Australian Financial Markets Data

Australia's financial markets are essential to its economic growth and international competitiveness. They enable efficient resource allocation, provide diversified funding for business activity, maintain liquidity, manage risks and support overall financial stability of the economy.  

AFMA members constitute the key market participants that assist the effective functioning of financial markets and the economy. They act as shock absorbers during times of economic or market uncertainty, exemplified notably during the recent COVID-19 Novel Coronavirus pandemic. As such, financial markets provide crucial support for companies and governments.

AFMA has compiled a suite of financial markets data designed to provide ready access to public domain information which otherwise may not be readily identifiable on the respective websites.   

Disclaimer:
Whilst every care has been taken by AFMA in compiling this data AFMA will not be liable for errors or omissions in its content, or for any consequences resulting from any errors or omissions, including any loss resulting from reliance on the use of this data. 

 

Repo Markets
Description and Purpose

A repurchase agreement (Repo) is a financial transaction in which one party sells an asset to another party with an assurance to repurchase the asset at a pre-specified later date (a reverse repo is the same transaction seen from the perspective of the security buyer).

Repos can be overnight (duration one day) or term (duration up to one year), albeit some are up to two years and the majority are three months or less.  The repo market enables market participants to provide liquidity to one another, and financial institutions predominantly use repos to manage short-term fluctuations in cash holdings, rather than general balance sheet funding.

Bilateral Repo – The bilateral repo market has investors and collateral providers directly exchange money and securities, absent a clearing bank. 

Tri-Party Repo – The tri-party repo market is named as such given the role played by clearing banks in facilitating settlement. Clearing banks act as an intermediary, handling the administrative details between the two parties in the repo transaction. This type of repo settlement is not as commonly used in Australia. Recently, the RBA executed a collateral management repo where ASX Collateral acted as a tri-party agent for the RBA's reverse repo agreements.

Government Bond Issuance
Description

The Australian Office of Financial Management (AOFM) manages the Australian Government’s borrowing needs (debt management) and ensures that there is enough money in its bank account (the Official Public Account) to meet its payment obligations at all times (cash management).

The government’s payment obligations include public spending, investments and repaying debt. When tax receipts are not expected to meet the government’s payment obligations in any year, the AOFM borrows money through global financial markets. 

Instruments

The AOFM currently issues three different instruments: Treasury Bonds, Treasury Indexed Bonds and Treasury Notes. Collectively, these instruments are referred to as Australian Government Securities (AGS). Treasury Bonds pay a fixed amount of interest (called a coupon) twice each year until the bond ‘matures’. Treasury Indexed Bonds pay a quarterly coupon that is linked to inflation. Treasury Notes are short term instruments that do not pay interest; rather, the investor pays less for them than they will receive at maturity.

Investors from Australia and overseas pay for the bonds, in return for regular interest payments and the repayment of principal at a set date in the future. Bonds (as financial instruments) are traded in financial markets.

Issuance Strategy

The AOFM sets an issuance strategy for each year. It is based on the mix of long-term and short-term debt and the mix of Treasury Bonds and Treasury Indexed Bonds. The AOFM aims for an outcome that balances the various risks and costs involved with different approaches under a range of possible financial market scenarios.

 
Foreign Exchange Turnover
Description
 

The foreign exchange market (also known as forex, FX, or the currencies market) is an over-the-counter (OTC) or decentralised global marketplace that plays an important role in determining the exchange rate for currencies through trading of various financial instruments around the world. Participants in these markets can buy, sell, exchange, and speculate on the relative exchange rates of various currency pairs.

The key participants in foreign exchange markets are banks, forex dealers, commercial companies, central banks, investment management firms, hedge funds, retail forex dealers, and investors.

Operation of foreign exchange markets

One of the most unique features of the market is that it is a global network of financial centers that transact 24 hours a day, closing only on the weekends. As one major hub closes, another hub in a different part of the world remains open for business. This increases the liquidity available in currency markets, which adds to its appeal as the largest asset class available to investors.

The unique characteristics of foreign exchange markets are: 

  • its huge trading volume, representing the largest asset class in the world leading to high liquidity;
  • its geographical dispersion;
  • its continuous operation: 24 hours a day except for weekends
  • the variety of factors that affect exchange rates;
  • the low margins of relative profit compared with other markets of fixed income; and
  • the use of leverage to enhance profit and loss margins and with respect to account size.