European Central Bank (ECB) expands the list of assets eligible for collateral in Eurosystem credit operations including STEP (Short Term European Paper) labeled papers issued by banks.
Under the agreement certificates of deposits (CDs) will also be eligible for collateral when traded on one of widely accepted commercial paper markets.
In order to be eligible as collateral for Eurosystem credit operations, marketable assets must comply with the eligibility criteria, exactly debt instruments issued by credit institutions and traded on accepted markets that are mentioned on the ECB website.
The European Banking Federation informs that all debt instruments covering the eligibility criteria will be subject to a 5% haircut add-on, in other words a 5% increase in the difference between the actual market value of a security and the value assessed by the lending side of a transaction.
The creation of STEP was already a landmark in the integration of European markets, says Guido Ravoet, secretary general, EBF. Since then, the EBF and STEP Market Committee members have invested a lot of effort towards this new development for the last two years. For us, this move is a positive step in the direction of further integration of the European Short-Term Papers market.
L.D.