Standard Chartered has entered into joint ventures with Euroclear Bank and Clearstream in Singapore, whereby assets for mutual clients held at Standard Chartered can be used as collateral to meet requirements in tri-party deals.
The launch comes one year after the announcement of the joint ventures, in which Standard Chartered became the first Asia-based bank to join Euroclear’s ‘Collateral Highway’ management service.
As a result, all equity and fixed-income securities held within Standard Chartered custody network can potentially become eligible assets to be used as collateral when Euroclear Bank or Clearstream serve as the tri-party agent.
“These are exciting times as the global capital markets adapt to changing regulations that impact the secured funding space… we are ensuring that customers can now take a holistic approach to collateral management and liquidity provision,” says George Nast, global head of product management for transaction banking, Standard Chartered.
International regulatory changes concerning derivatives and other OTC trades have resulted in institutional investors, from a wide range of regional jurisdictions, being brought into the scope of cross-border rules on collateral and clearing. Regulatory pressures, especially on global firms, have prompted ICSDs to launch global solutions to meet demands of cross-border collateral management.
The launch of the venture comes three months after Standard Chartered was appointed to provide agency and trust services for Euroclear and Clearstream.
“Our priorities in collateral management are primarily to grow the connectivity that we have on the Collateral Highway, in terms of both sourcing and delivering both bonds and equities from around the world on behalf of our clients in an automatic and frictionless manner,” adds Olivier Grimonpont, general manager and regional head, APAC, Euroclear.
The venture between Standard Chartered and Euroclear went live on Tuesday, while the connection to Clearstream’s Global Liquidity Hub will launch on November 17.
“We have received positive feedback from the market and customers have started to sign up already – we expect first transactions to take place in the week the service,” says Stefan Lepp, member of the executive board and head of global securities financing, Clearstream.
In addition to Standard Chartered, Clearstream is also partnering with the Singapore Exchange (SGX) under the Liqudity Hub GO (Global Outsourcing) service, which will bring a collateral management solution to the Singaporean market as a whole. Under the partnership, SGX will white-label Clearstream’s collateral management services to cover domestic exposures in the local market.
The CSD is looking to expand its Global Liqudity Hub in the region to the main Asian financial hubs, with Hong Kong to follow.