The Bank of Italy will use Clearstream to make available government-bond debt purchased under the European Central Bank (ECB)’s Public Sector Purchase Programme (PSPP) for securities lending.
According to a statement from the Italian central bank it will allow lending of securities at a 10 basis-point fixed fee for lending the Italian government bonds, cheaper than the ECB’s 40 basis-point fee.
To ease concerns over a scarcity of collateral due to the ECB’s quantitative easing programme, securities purchased by the ECB such as euro sovereign bonds will be available for securities lending.
The programme is aimed at primary dealers and other institutions with market making arrangements, provided they fulfil certain legal requirements.
The service will include fail coverage activities in support of settlement and strategic market activities.
Lending of PSSPP securities is to take place on a cash neutral basis, meaning that repo transactions against cash collateral will be accompanied by a fully offsetting reverse repo transaction for the same value date with the same counterparty.
Clearstream to Facilitate Italian Central Bank Securities Lending
The Bank of Italy will use Clearstream to make available government-bond debt purchased under the European Central Bank (ECB)’s Public Sector Purchase Programme (PSPP) for securities lending.