Eurex Repo and Clearstream announced today that the eligible collateral for the GC Pooling market and the Eurosystem Collateral Management Services was extended to French bonds as of yesterday. This means that customers have now access to a wider range of securities to pledge as collateral to the European Central Bank (ECB) allowing them to access liquidity in an efficient and secured way.
The extension became feasible following the approval of the Governing Council of the ECB to use the direct and the relayed link from Clearstream Luxembourg and Clearstream Banking Frankfurt to Euroclear France (France) for the collateralisation process of Eurosystem’s credit operations. This specifically enables eligible counterparties to benefit from Clearstream’s Collateral Management Services by including these assets in their collateral pool.
After the extension, the Euro GC Pooling basket, which can be used for ECB open market operations, now encompasses more than 8,000 denominated securities. The pool consists of Eurobonds, government bonds, covered bonds (e.g. Pfandbriefe) and agency bonds from Germany, Italy, Austria, Belgium, the Netherlands, Luxembourg and France. A full re-use possibility as collateral for ECB open market operations can be arranged through Clearstream’s integrated Collateral Management Services.
Marcel Naas, Managing Director of Eurex Repo GmbH, said, “The GC Pooling market has proven to be a reliable liquidity pool even in difficult market circumstances. The latest enhancement to French bonds as ECB eligible collateral increases the efficiency and cash funding potential for our participants.”
Stefan Lepp, Head of Global Securities Financing, Clearstream, added, “The expansion to French securities creates a much larger collateral pool for Clearstream’s clients. In times of uncertainty, we offer them the possibility to actively and closely manage their cash liquidity as well as to optimize the use of their collateral through Clearstream’s wide range of Collateral Management Services.”
In September 2008, the average outstanding volume in GC Pooling peaked at €47 billion compared to €15 billion a year ago. A new record was set on 6 October with daily outstanding volume of €56 billion. 28 Eurex Repo participants are currently active in this segment. GC Pooling also enables the settlement of high-volume transactions, and has already processed individual transactions in excess of €10 billion.
GC Pooling was launched in March 2005. It is an innovative solution for the Euro Repo market, which offers participants three key benefits: trading on a fully electronic trading system including a central counterparty, an efficient collateral management service and the automated exchange of securities and money. GC Pooling allows banks to efficiently manage their liquidity and securities holdings.
