The selection of instruments that can be used as collateral is being expanded to make the market more attractive - especially for banks with international operations - and stimulate the interbank market. The issues can be used as so-called General Collateral (GC) as well as for Special Repo trading. Domestic and international Eurex Repo participants can now also carry out their funding and collateral management with German jumbo Pfandbriefe on the Swiss franc interbank market directly as well as in the Swiss National Bank (SNB) auctions which usually take place every day. Eurex-Repo head Marcel Naas said "the expanded basket will make Eurex Repo even more attractive. The integration of trading, clearing and settlement with triparty service on a single electronic platform is a milestone in the fully automated processing and settlement of securities transactions, with an unprecedented level of efficiency."
Jumbo Pfandbriefe eligible for repo transactions have to meet the following prerequisites, defined by Eurex and the Swiss National Bank (SNB): Issuers must be banks; the Pfandbrief issues to be deposited as collateral have to have at least a AA rating from Moody's or Standard & Poor's; and the size of the issue must be at least one billion euros. These conditions are currently met by some 200 outstanding Jumbo Pfandbrief issues with a nominal value of roughly 300 billion euros.
Starting March 1st, the SNB will, as a rule, post the new basket with the German jumbo Pfandbriefe, in addition to the existing baskets, in conjunction with the daily auctions. In the future, securities from the new basket will also be deliverable as cover for purchases of intraday liquidity.
