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Clearstream rolls out OTC Collateral
06 March 2014
Bilateral collateral management service to aid OTC processing
Clearstream is launching OTC Collateral, a bilateral collateral
management service that will strengthen the over-the-counter
(OTC) processing capabilities of the Global Liquidity Hub, the
company’s integrated risk and liquidity management
The full lifecycle of bilateral collateral management activity
will now be supported via the Global Liquidity Hub, from Credit
Support Annex review and administration, mark-to-market,
margining, dispute management and portfolio reconciliation to
payment and settlement follow-up and reporting.
Stefan Lepp, head of global securities financing and member of
the executive board of Clearstream, said: "Our bilateral
collateral management service OTC Collateral is an important
expansion of the Global Liquidity Hub and will strengthen our
offering to banks and the buyside in line with the growing
demand in the OTC derivative space."
"Its seamless connection to the tri-party world via a range of
reuse possibilities will enable customers to meet all their
exposures from a single collateral pool, regardless of whether
they are bilateral, tri-party or to a CCP."
OTC Collateral will help customers overcome collateral
fragmentation and optimise allocation by enabling them to cover
over-the-counter, tri-party and central counterparty exposures
from a single collateral pool.
This unique optimisation opportunity will be especially useful
for derivative exposures, as customers are currently facing the
challenge of managing two parallel streams of exposures for
cleared and uncleared collateral trades.
While OTC Collateral focuses on the immediate market need for
OTC derivative exposures, all types of bilateral collateral
management activity are in scope, including bilateral repo,
securities lending and special collateral agreements.
The bilateral collateral management service fits in with other
Global Liquidity Hub services – reuse to the tri-party
world will be facilitated as an integral part of the offering.
As the custody of security collateral will be in Clearstream,
customers will also have full access to
Clearstream’s custody and asset servicing product
OTC Collateral is also linked to the TradeCycle service for
cleared and uncleared derivatives Clearstream offers in
collaboration with Commerzbank.
Clearstream’s tri-party collateral management
services and the bilateral service OTC Collateral are part of
the TradeCycle product suite.