Standard Chartered and Clearstream have signed a letter of intent to develop a customized collateral management service for their mutual clients in Asia.
Customers of both companies will be able to consolidate their collateral holdings through Clearstream’s Global Liquidity Hub Connect, the ICSD’s collateral management service for financial institutions, and cover their global exposures from a single collateral pool. The assets of both clients will remain with Standard Chartered as custodian.
Liquidity Hub Connect aims to help financial institutions to mobilize their collateral in order to satisfy new market regulations. Optimizing collateral ensures institutions can reduce financing costs and avoid maintaining excessive collateral buffers.
George Nast, global product head, Transaction Banking at Standard Chartered Bank, said: “I am pleased that the joint clients of Standard Chartered and Clearstream will be able to cover their global exposures from a single collateral pool. Not only will clients across or footprint markets of Asia, Africa and the Middle East be able to effectively collateralize obligations on a real time basis, they can overcome an industry challenge of collateral fragmentation as well.“
Stephen Pemberton, global head of Brokers & Investment Banks, Investor and Intermediaries, Transaction Banking at Standard Chartered added: “As a client led organization, this partnership will allow Standard Chartered to offer our mutual clients a market leading collateral management capability. This is consistent with our strategy of increasing the breadth, depth and sophistication of our suite of securities services products and is an extension of our current offering.”
Stefan Lepp, member of the Executive Board and Head of Global Securities Financing at Clearstream said: “We have been working with Standard Chartered for some time now and are pleased to be able to reinforce our relationship through developing the Liquidity Hub Connect service.
“This will be the third customized Liquidity Hub Connect service to be developed and we are pleased to say that it delivers the most efficient solution on the market as it only mobilizes collateral based on actual demand.”
The service is part of a wider strategy to cover as many collateral exposures as possible through Clearstream’s Global Liquidity Hub service, said a spokesperson for Clearstream.
The service also has Liquidity Hub Go for CSDs and Liquidity Hub Collect for electronic trading venues and hubs. Standard Chartered is the third financial institution to join the hub, following BNP Paribas Securities Services and Citi last year. BNP Paribas Securities Services is expected to go live with the service shortly.
On Liquidity Hub Go Australian Stock Exchange’s CSD will join in the Summer, Spanish CSD Iberclear and South African CSD Strate in Autumn. Brazilian CSD Cetip went live with the service early this year.
Clearstream’s Global Securities Financing (GSF) services, which include triparty repo, securities lending and collateral management, saw a monthly average outstanding volume reach €576.2 billion on April 5 2013.
Standard Chartered offers securities services in 39 markets, with local fund services capabilities in 11 of these markets.