SECURITIES FINANCE

Clearstream’s GSF feels the bite of ECB policy

QE concerns put pressure on Clearstream's securities finance business.

By Joe Parsons joe.parsons@strategic-i.com April 20, 2017 10:00 AM GMT

Clearstream’s global securities financing (GSF) business saw a 12% fall in total outstanding in March as a resulted of continued quantitative easing from the European Central Bank (ECB).

Outstanding volumes at Clearstream’s GSF unit were €474.4 billion, down from €538.2 billion for the same month last year, with year-to-date volumes standing at €486.3 billion, down 8%.

With the ECB’s decision to stick to its bond buying programme and withdraw government securities from the market, it has effectively reduced the volume of high quality securities to borrow, making it difficult for market participants to obtain collateral.

“Quantitative easing has major implications for the securities finance industry, in particular when it comes to capital requirements and risk management”, said Philippe Seyll, co-CEO, Clearstream Banking S.A.

Despite Clearstream’s results, securities lending is set to have a record year with global industry surpassing the $2 trillion mark, according to securities finance market data provider DataLend.

Meanwhile, assets under custody at Clearstream increased 3% year-on-year to €13.3 trillion.