Clearstream and Deutsche Bank have signed an agreement to develop a customised tri-party collateral management solution that Deutsche Bank can offer to its customers.

The arrangement will allow Clearstream to further increase its collateral under management (€626.9bn in June 2014) with additional Deutsche Bank liquidity.

Deutsche Bank’s customers will be able to leverage the integrated suite of tri-party collateral management services that Clearstream offers via its Global Liquidity Hub.

“On the one side, our collateral strategy is about linking to ever more exposure locations such as clearing houses and central banks, and on the other side our strategy is to provide access to a growing number of collateral locations such as central securities depositories, stock exchanges and agent banks,” said Stefan Lepp, head of global securities financing at Clearstream.

"We are pleased to help Deutsche Bank with our collateral management technology while in return we can offer our customers access to the large liquidity pool of Deutsche Bank.”

While Deutsche Bank customers retain their asset portfolios within Deutsche Bank’s extensive custody network, Clearstream’s collateral management engine carries out complex collateral management functions such as automated and real-time allocation, optimisation and substitution.

The agreement follows Clearstream’s similar arrangements with BNP Paribas, Citi and Standard Chartered, which also use Clearstream’s collateral management solution for agent banks.

Improving access to collateral is becoming an increasingly important issue for the financial industry as regulation drives demand for optimisation as well as adequate levels of capital and liquidity.