Effective immediately, Euroclear Bank’s triparty collateral management clients can increase the liquidity of their securities collateral by re-using these securities to cover multiple exposures arising from repos, securities lending, derivatives or other collateralised transactions with different counterparties. Currently valued at over EUR 320 billion daily, client collateral administered by Euroclear Bank, as triparty agent, represents tremendous re-use potential as clients now have the capacity to pool securities received as collateral and re-use them in any other triparty transaction.
Olivier Grimonpont, Euroclear Bank’s Director and head of Collateral Management and Securities Lending Services, stated: “Our commitment to, and dialogue with, our clients and the Collateral User Group have produced a market-driven enhancement that will offer new collateralised trading opportunities as liquidity pools swell. Our new re-use feature is an important step in supporting the general collateral repo business in Europe, allowing a greater portion of the business to be processed in a triparty environment. Indeed, only 10% of all repos in Europe are conducted with triparty collateral management support compared to an estimated 50% in the United States.”
This new re-use feature is fully automated and integrated within Euroclear Bank’s triparty collateral-management service. AutoSelect, the automatic securities allocation and monitoring module, has been upgraded to manage multiple collateral re-use possibilities within each of the 15 AutoSelect daily cycles. Collateral givers will retain full control of securities pledged as collateral, and may substitute all securities from all legs of all collateralised transactions during each and every one of the AutoSelect cycles.
