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South African collateral mgt service launched
31 October 2013
Major institutions join forces with the CSD and Clearstream to improve collateral management
South African Central Securities Depository
South African Central Securities Depository (CSD), Strate, and Clearstream, have launched a centralised collateral management service for the South African financial market.
The move to higher collateral requirements under Basel III, Solvency II and other regulations, will force South African institutional investors and financial institutions will force “a rethink” in how the industry approaches collateralisation, Strate said.
Several major South African banks, fund managers and the Johannesburg Stock Exchange (JSE), have committed to exploring centralised collateral management services to improve collateral management and mitigate operational and credit risk, and have formed a Collateral Management Industry Forum.
Anthony van Eden, Strate’s strategic projects director, said there had been “overwhelming interest” in centralised collateral management from South African investors and institutions.
“We are also in discussion with a number of other financial institutions, in addition to the ones named above, who are seeing the benefit of this industry-wide initiative and exploring the use of the service,” he said.
The service was initially developed by Clearstream and has been in place in other geographies outside of Europe since 2011.
Stefan Lepp, head of global securities financing and member of the executive board of Clearstream, said making global markets more robust through risk and liquidity management solutions was a strategic priority for the firm.
“Collateral has become a very scarce resource and sourcing good quality collateral is increasingly expensive. The service looks to manage collateral holdings and exposures much more efficiently to provide markets with access to much needed liquidity,” he said.