MARKET INFRASTRUCTURE

Dutch pension fund giant signs up to Eurex securities lending CCP

The addition of PGGM as its first buy-side member could significantly increase cleared securities lending volumes.

By Joe Parsons joe.parsons@strategic-i.com September 12, 2017 12:18 PM GMT

Eurex Clearing has signed up Dutch pension fund PGGM as the first buy-side client for its securities lending central counterparty (CCP) model.

The win for Eurex Clearing marks the first success for the securities lending CCP after going live with the direct clearing service in March 2016.

“The CCP model enables new stock lending structures and business opportunities for beneficial owners as well as helping to manage the rising burden of balance sheet regulation and costs for the securities lending market,” said Roelof van der Struik, investment manager, treasury trading and commodities, PGGM.

Eurex partnered with securities lending platform EquiLend in 2016 as the preferred clearing house for market participants trading on the platform.

It also signed up Morgan Stanley and Natixis as clearing members, and in 2015 partnered with global custodians BNY Mellon and State Street to boost securities lending clearing.

Cleared securities lending transactions, however, have been relatively low. But with the addition of PGGM as its first buy-side clearing member, volumes are expected to increase.

“We anticipate greater utilisation of our link to Eurex as the securities finance industry looks to realise the benefits of a CCP model,” said Brian Lamb, CEO, EquiLend.

Through the direct access model, Eurex believes it could mean reduced capital requirements for both the buy-side and sell-side.

Eurex hopes to exclusively capture European pension funds, investment funds, re-insurance and financial services companies with the service.

“The usage by its members will further enhance the attractiveness of our Lending CCP and be mutually beneficial to our clients and other connected markets across asset-classes,” said Marcel Naas, global head of funding and financing, Deutsche Boerse.