Clearstream has spurred the evolution of the securities lending and triparty repo markets in the Middle East through co-operations with Abu Dhabi Commercial Bank (ADCB) and the National Bank of Abu Dhabi (NBAD).
ADCB has joined Clearstreams triparty repo service as a new cash provider. The first trade was executed in the second quarter of 2012 with Commerzbank Dubai. ADCB accepts Middle Eastern securities to collateralize those trades. In addition, NBAD settled the first loan transaction through Clearstreams Automated Securities Lending (ASL) offering, a service that enhances settlement efficiency through automated loans.
The latest transactions build on a recent milestone in August 2011, when Clearstream facilitated the first tri-party repo trade where cash is lent from a Middle East cash provider. This first trade of NBAD as local cash provider settled on July 7 through the Clearstream Global Liquidity Hub infrastructure. Prior to that date, Middle East financial institutions would usually trade (tri-party) repos with counterparts and collateral outside the Middle East.
Kevin Taylor, treasurer at Abu Dhabi Commercial Bank, said: Triparty repo is gaining traction in the Middle East and ADCB is keen to be an active participant and contributor to this trend. Our first Middle EasternTriparty trades are another example of how ADCB manages its liquidity by using all available and best in class techniques. Additional participants from the region will also add momentum to a dynamic triparty repo market among regional and international banks and will promote broad usage of GCC collateral.
Paul Voce, global head of Repo, National Bank of Abu Dhabi, said: We continue to strengthen our relationship with Clearstream and have successfully tested the securities lending offering. Securities lending is an integral part of any liquid repo market and we are leading the way to further facilitate these markets in the Middle East.
Clearstram entered the Middle East with the opening of an office in Dubai in 1995.
(JDC)