Clearstream to Offer Cross-Border Tri-Party Collateral Services

Once the European Central Bank (ECB) enables the use of tri-party services for cross-border collateral pledges to national central banks starting September 29, Clearstream will offer all Eurosystem participants tri-party collateral pledge services that previously have only been used for domestic transactions.
By Jake Safane(2147484770)
Once the European Central Bank (ECB) enables the use of tri-party services for cross-border collateral pledges to national central banks starting September 29, Clearstream will offer all Eurosystem participants tri-party collateral pledge services that previously have only been used for domestic transactions.

The cross-border tri-party collateral management services will be introduced under the ECB’s Correspondent Central Banking Model (CCBM), which allows participants to use assets issued in other countries to obtain credit from the central bank of the country in which they are based; these assets can be used by having the securities settlement system—in which the securities have been issued and deposited—transfer the collateral to an account maintained by the local national correspondent bank.

All Eurosystem participants can use their ECB-eligible assets held at Clearstream to collateralize central bank exposures in real-time and obtain intraday liquidity in TARGET2, the Eurosystem payment settlement system.

These services will be provided by both Clearstream’s international central securities depository (ICSD) and its central securities depository (CSD) in Germany.

Clearstream says these services will help counterparties optimize the collateral used in credit operations and for covering exposures such as repo, securities lending, central bank credit, secured loans and OTC exposures, and the cross-border movement will help to overcome collateral fragmentation and improve risk management and operational processing.

“Thanks to these changes of the European Central Bank, customers participating in Eurosystem tender offers and auctions can benefit from automated tri-party allocation by Clearstream to their home central banks,” says Stefan Lepp, Clearstream executive board member in charge of Global Securities Financing. “This means that Eurozone customers can manage their exposures from a single collateral pool at Clearstream, thereby meeting all their EUR liquidity requirements in both central and commercial bank money via our integrated collateral management environment, the Global Liquidity Hub.”

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