Avox, a subsidiary of Deutsche Boerse, is expanding its services to a new business area; monitoring services for collateral used in open market operations in the Eurosystem.
Avox intends to build up financial institutions’ hierarchies and monitor them on a weekly basis. This hierarchy is then mapped against assets eligible in open market operations to prevent banks from submitting as collateral towards the central bank own issues or assets issued by related parties.
For instance, a bank must avoid “close links” meaning it must not submit as collateral any asset issued or guaranteed by itself or by any other entity with which it has close links by owning 20 percent or more of the capital.
“With the Avox Collateral Monitoring Service we offer banks a great value in their open market operations because the amount of collateral can be increased at the same time minimizing the risk of a penalty from the central bank. With the enlarged amount of eligible assets banks can improve their liquidity,” says Ken Price, CEO of Avox.