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Iberclear, the Spanish central securities depository and subsidiary of BME (Bolsas y Mercados Españoles), and the international central securities depository Clearstream have signed an agreement to develop a new tri-party collateral management service for the Spanish market. The service will target the collateralisation of exposures in the Spanish market of Iberclear clients. In the first phase, it will cover the exposures resulting from domestic repo transactions, including the possibility of pledging received assets from a repo transaction with the Spanish central bank (Banco de España) in order to get access to central bank money.
The service will be launched ahead of a multitude of regulatory changes that will require financial and non-financial institutions to improve their liquidity and collateral management efficiency. Iberclear is the first European post-trade services provider that will outsource the allocation, optimisation and substitution of domestic collateral to Clearstream’ proven collateral management system, the Global Liquidity Hub. Through the Liquidity Hub GO (Global Outsourcing) service, Iberclear clients will be in a position to handle their domestic collateral holdings and exposures more efficiently while keeping them in the domestic Spanish environment.
Jeffrey Tessler, CEO Clearstream, said: “We are delighted to expand the Liquidity Hub GO partnership model to Iberclear and to support the first European market in managing domestic collateral more efficiently. It’s a strategic priority of Deutsche Börse Group to make global markets more robust through risk and liquidity management solutions such as Clearstream’s collateral management outsourcing service. Collateral has become a very scarce resource and sourcing good quality collateral is increasingly expensive – we can help managing collateral holdings and exposures much more efficiently. Clearstream is committed to providing global markets with access to liquidity.”
José Massa, Chairman of Iberclear, said: “We have a strong and very productive commercial relationship with Clearstream and we are pleased to continue developing new initiatives in partnership. We are sure the new service jointly developed with our partner will satisfactorily meet the demands of our clients, who in the current environment need, more than ever, tools to securely and efficiently handle their collateral. The service is a major step forward for Iberclear and the Spanish market as it will allow our clients to manage their collateral holdings and exposure more efficiently without moving it out of Spain.”
Iberclear will build on this initiative to broaden its range of custody services. The management of collateral will also cover international securities, furthering in this ways its efforts to become the Spanish firm’s provider of choice for national and international custody services.
Clearstream’s Liquidity Hub GO service went live with the Brazilian CSD Cetip in July 2011. Since then further development plans have been announced between Clearstream and the Australian Securities Exchange (August 2011), the South African CSD Strate (January 2012) and the Canadian CSD CDS (March 2012). The initiative has gained momentum as upcoming regulatory changes require financial and non-financial institutions to improve their capital management. Clearstream is the only collateral management services provider with a proven ability to manage collateral across time zones without transferring assets out of the respective domestic environment.
The Accenture/Clearstream report “Collateral Management: Unlocking the Potential in Collateral”, published in September 2011, revealed that the financial services sector could save more than 4 billion Euros annually in collateral management costs by addressing operational inefficiencies.
