Euroclear Adds Re-Hypothecation To Tri-Party Service

Euroclear Bank has launched a collateral re-use feature in its triparty collateral management service
By None

Euroclear Bank has launched a collateral re-use feature in its triparty collateral management service. A result their clients will now be able to increase the liquidity of their securities collateral by re-using these securities to cover multiple exposures arising from repos, securities lending, derivatives or other collateralised transactions with different counterparties.

Currently valued at over €320 billion daily, client collateral administered by Euroclear Bank, as triparty agent, aims to give clients the capacity to pool securities received as collateral and re-use them in any other triparty transaction.

“Our commitment to, and dialogue with, our clients and the Collateral User Group have produced a market-driven enhancement that will offer new collateralised trading opportunities as liquidity pools swell,” says Olivier Grimonpont, the Director and head of Collateral Management and Securities Lending Services at Euroclear Bank. “Our new re-use feature is an important step in supporting the general collateral repo business in Europe, allowing a greater portion of the business to be processed in a triparty environment. Indeed, only 10 percent of all repos in Europe are conducted with triparty collateral management support compared to an estimated 50 percent in the United States.”

The new re-use feature is fully automated and integrated within Euroclear Bank’s triparty collateral-management service. AutoSelect, the automatic securities allocation and monitoring module, has been upgraded to manage multiple collateral re-use possibilities within each of the 15 AutoSelect daily cycles. Collateral givers will retain full control of securities pledged as collateral, and may substitute all securities from all legs of all collateralised transactions during each and every one of the AutoSelect cycles.