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Clearstream, Eurex Repo and Eurex Clearing offer clients joint agency securities lending

Release date: 01 Dec 2015 | Eurex Repo

Clearstream, Eurex Repo and Eurex Clearing offer clients joint agency securities lending

New service expected to boost securities lending fixed-income volumes

Deutsche Börse Group has enhanced its securities lending services by linking a new agency lending service by Clearstream with Eurex Repo and Eurex Clearing.

The new offering combines several elements of the broad Deutsche Börse value chain. The joint new service is already available with first users reaching readiness. It offers customers advantages in terms of capital efficiency, straight-through-processing and potential higher returns for lenders as they can maximise the yield on their assets in a low-risk environment.

The transaction between the lenders and the borrowers is managed by Clearstream as the agent lender and tri-party collateral agent via the Global Liquidity Hub. Eurex Repo’s SecLend market with its broad pan-European GC Pooling client base is the trading venue while Eurex Clearing will provide instant clearing as the central counterpart to both the lenders and the borrowers.

“This new agency lending service via CCP offers lenders an additional source of revenue by reaching out to different borrowers compared to our well-established principal model ASLplus. Our joint agency lending service is perfectly suited to large, fixed-income lenders who are looking for a secured and centrally cleared solution”, said Pascal Morosini, Global Head of GSF Sales, Clearstream.

“This joint effort will be beneficial for the liquidity and attractiveness of our electronic SecLend market. Especially the full automation of this service with complete straight-through processing is a unique feature and appreciated by our users to increase trading efficiency,” said Frank Gast, Managing Director Eurex Repo.

“Eurex Clearing's innovative membership model allows Clearstream’s customers direct CCP access under our specific lender license providing the basis for improved economics for lenders and borrowers by reducing capital costs,” added Matthias Graulich, Chief Client Officer of Eurex Clearing.

Further information

Eurex Repo, part of Deutsche Börse Group, is a leading provider for international financing in the secured funding and financing markets (repo and securities lending). Its highly liquid marketplace combines state-of-the-art electronic trading with the efficiency and safety of Eurex Clearing as well as collateral management and settlement – and is continuously growing. Currently, more than 140 European financial institutions are active in the following markets: GC Pooling®, Euro Repo and SecLend Market.

Clearstream’s CCP agency lending service is part of an entire suite of securities lending services offered by Clearstream under the Global Liquidity Hub. In addition to standard agency securities lending services without a CCP, customers can also benefit from a principal securities lending service in which Clearstream takes on the counterparty risk (ASLplus). Assets can also be distributed via the automated securities lending service to cover settlement fails (ASL). Customers maximise the use of their assets and the associated yield by signing up to the entire securities lending suite of the Global Liquidity Hub.

The Lending CCP is based on Eurex Clearing’s established infrastructure and industry-leading risk management standards. The clearing house, as a single counterparty to all trades, reduces counterparty risk exposure and eliminates the need for multiple credit evaluations. Users can achieve a significant reduction in capital allocation associated with bilateral securities finance transactions. The service is covering loans in international fixed-income securities, European equities and ETFs.

A unique feature of Eurex Clearing’s Securities Lending CCP is a Specific Lender License that benefits both Agent Lenders and their Beneficial Owners. This ensures greater participation by the buy-side by offering tiered membership, thus increasing the liquidity available to clients. With this set-up, it preserves the special structure of the securities lending market and offers the capital efficiency and safety associated with central clearing.