CSD Association to Adopt New Customer Connectivity Solution

The Liquidity Alliance, an association of five central securities depositories (CSDs), will implement a new customer connectivity to meet demands of collateral mobilization as market participants continue to adapt to global regulatory changes.

The Alliance, made up of Clearstream (Germany), Iberclear (Spain), Strate (South Africa), ASX (Australia) and Cetip Brazil), will roll out the new interface to deliver enhanced management tools for collateral transactions for their clients.

Cetip will pilot the new connectivity interface this month, with the other Liquidity Alliance members subsequently implementing the solution throughout the coming year.

“Being part of the Liquidity Alliance with its global reach has enabled us to understand customer requirements even better and to define superior solutions to service their needs together with our partners,” says Stefan Lepp, head of global securities financing, Clearstream. “As the technical solution provider, Clearstream is pleased to deliver the next generation of customer connectivity which will bring benefits to all current and future Liquidity Alliance members and their clients.”

As new regulatory rules continue to be implemented across the world, this has created new challenges for investors to transfer and mobilize collateral stationed in one part of the world to be used in another.

The ability to allow seamless mobilization of cross-border collateral prompted Clearstream and Iberclear to provide its fellow members access to Europe’s incoming settlement platform, Target2-Securities (T2S).

While T2S is largely being constructed as a purely European project, the ‘Liquidity Alliance’ will allow global access to a harmonized collateral pool in order to boost liquidity within and beyond Europe. The association is planning to extend its offerings to allow domestic collateral to cover international exposures and vice versa, in a bit to overcome collateral fragmentation.