ICMA’s European Repo Council welcomes acceptance of credit claims as financial collateral. Also Council approves adoption by the European Parliament of Piia Noora Kauppi’s report on securities settlement services systems and financial collateral arrangements.
The repo market is large sector in today’s money markets and, as evidenced in the recent market turmoil, plays a critical role in liquidity provision for the financial system. The proper functioning of the repo market is dependent upon legal certainty in collateralisation arrangements.
“Increasing the pool of securities and credit available for the collateralisation of market transactions will reduce counterparty risks, contribute to market liquidity and strengthen overall market resilience,” says Godfried de Vidts, chairman, The European Repo Council. “This is also consistent with the work which the ERC has undertaken and will continue with the Eurosystem to develop a secondary market in credit claims for collateralisation purposes.”
L.D.