Standard Chartered and Euroclear Bank have entered into a partnership whereby assets for mutual clients held at Standard Chartered will now be available for use as collateral – via Euroclear’s collateral management service – to meet collateral requirements in tri-party deals managed by Euroclear Bank.
Standard Chartered is the first Asia-based agent bank to join Euroclear’s global Collateral Highway, which sources and mobilizes more than €700 billion of collateral daily from its CSD and other financial institutions globally. As a result, all equity and fixed-income securities held within the Standard Chartered custody network can potentially become eligible assets to be used as collateral when Euroclear Bank serves as the triparty agent. As a result, clients will be able to broaden the pools of collateral available to secure exposures arising from various types of transactions, while benefitting from greater interoperability and choice as to how they can finance their assets.
Standard Chartered will continue to hold the assets as custodian while the securities move across markets and time zones via Euroclear’s Collateral Highway. These assets may be transported as collateral to cover exposures arising from, for example, repos, loans, derivatives and CCP margins, as well as for access to central bank liquidity.
Olivier Grimonpont, general manager and region head, Asia-Pacific, of Euroclear Bank, said: “The agreement with Standard Chartered to make assets in their network available to the Collateral Highway will ease cross-border financing. Euroclear Bank is active in collateralizing many types of transactions, including cross-border RMB repo deals. Access to assets held by Standard Chartered to collateralize these transactions will open the market even further. We are delighted to be partnering with Standard Chartered to add a tri-party dimension to their collateral management service offering and to offer even deeper pools of liquidity to our mutual clients.”
Alan Naughton, global product head of Investors and Intermediaries, Transaction Banking, Standard Chartered, commented: “This collaboration demonstrates our client-centric strategy, where we address our clients’ challenges of collateral scarcity and fragmentation when operating across our footprint markets of Asia, Africa and the Middle East.”
Standard Chartered has also partnered with Clearstream to develop a customized collateral management service for their mutual clients in Asia. Customers of both companies will be able to consolidate their collateral holdings through Clearstream’s Global Liquidity Hub Connect, the ICSD’s collateral management service for financial institutions, and cover their global exposures from a single collateral pool. The assets of both clients will remain with Standard Chartered as custodian.