Eurex Repo and Clearstream announced today that the eligible collateral for the GC Pooling market and the Eurosystem Collateral Management Services was extended to French bonds as of yesterday. This means that customers have now access to a wider range of securities to pledge as collateral to the European Central Bank (ECB) allowing them to access liquidity in an efficient and secured way.
The extension became feasible following the approval of the Governing Council of the ECB to use the direct and the relayed link from Clearstream Luxembourg and Clearstream Banking Frankfurt to Euroclear France (France) for the collateralisation process of Eurosystem's credit operations. This specifically enables eligible counterparties to benefit from Clearstream's Collateral Management Services by including these assets in their collateral pool.
After the extension, the Euro GC Pooling basket, which can be used for ECB open market operations, now encompasses more than 8,000 denominated securities. The pool consists of Eurobonds, government bonds, covered bonds (e.g. Pfandbriefe) and agency bonds from Germany, Italy, Austria, Belgium, the Netherlands, Luxembourg and France. A full re-use possibility as collateral for ECB open market operations can be arranged through Clearstream's integrated Collateral Management Services.
Marcel Naas, Managing Director of Eurex Repo GmbH, said, "The GC Pooling market has proven to be a reliable liquidity pool even in difficult market circumstances. The latest enhancement to French bonds as ECB eligible collateral increases the efficiency and cash funding potential for our participants."
Stefan Lepp, Head of Global Securities Financing, Clearstream, added, "The expansion to French securities creates a much larger collateral pool for Clearstream's clients. In times of uncertainty, we offer them the possibility to actively and closely manage their cash liquidity as well as to optimize the use of their collateral through Clearstream's wide range of Collateral Management Services."
In September 2008, the average outstanding volume in GC Pooling peaked at Euro 47 billion compared to Euro15 billion a year ago. A new record was set on 6 October with daily outstanding volume of Euro 56 billion. 28 Eurex Repo participants are currently active in this segment. GC Pooling also enables the settlement of high-volume transactions, and has already processed individual transactions in excess of Euro 10 billion.
GC Pooling was launched in March 2005. It is an innovative solution for the Euro Repo market, which offers participants three key benefits: trading on a fully electronic trading system including a central counterparty, an efficient collateral management service and the automated exchange of securities and money. GC Pooling allows banks to efficiently manage their liquidity and securities holdings.
Note to editorial staff:
Relayed links are contractual and technical arrangements for the transfer of securities involving at least three securities settlement systems (SSSs): the "investor" SSS, the "issuer" SSS and the "intermediary" SSS. The Governing Council of the ECB decided in January 2005 that relayed links may be used in the collateralisation of the credit operations of the Eurosystem, but only after an assessment has been carried out against the Eurosystem's standards to ensure that the conditions set by the Governing Council have been met.
The relayed link covered in this ad hoc assessment was put forward by the German central securities depository, CBF, acting as investor SSS, while CBL acts as the intermediary SSS between Euroclear France, the issuer SSS, and the investor SSS. The assessment has confirmed that this relayed link is eligible to be used in the collateralisation process of the Eurosystem's credit operations. The assessment also confirmed that the direct link from CBL to Euroclear France is considered eligible to participate in the collateralisation process of the Eurosystem's credit operations.
About Eurex Repo
Eurex Repo (www.eurexrepo.com) ranks among the leading markets for electronic repo trading and operates the CHF and EUR Repo Markets. The Eurex CHF Repo Market was launched in 1999, and the EUR Repo Market followed in 2001. More than 180 participants from nine countries are currently admitted to trading on Eurex's repo markets. Eurex Repo is the only platform in Europe to offer all of the advantages of electronic trading in combination with the anonymity of the central counterparty Eurex Clearing AG and Clearstream Banking's centralized collateral management system. Eurex Repo is a wholly-owned subsidiary of Eurex.
Repo trading allows banks to lend/borrow their security holdings in exchange for money and receive or grant liquidity as a result. The ECB and the majority of national European central banks use repo transactions to control money supply.
About Clearstream
Clearstream (www.clearstream.com) is an international securities depository and is responsible for post-trade services within Deutsche Börse Group. With its Global Securities Financing services, Clearstream offers settlement and custodial services along with instruments for collateral management. The service business comprises tri-party repo, securities lending and collateral management.
The extension became feasible following the approval of the Governing Council of the ECB to use the direct and the relayed link from Clearstream Luxembourg and Clearstream Banking Frankfurt to Euroclear France (France) for the collateralisation process of Eurosystem's credit operations. This specifically enables eligible counterparties to benefit from Clearstream's Collateral Management Services by including these assets in their collateral pool.
After the extension, the Euro GC Pooling basket, which can be used for ECB open market operations, now encompasses more than 8,000 denominated securities. The pool consists of Eurobonds, government bonds, covered bonds (e.g. Pfandbriefe) and agency bonds from Germany, Italy, Austria, Belgium, the Netherlands, Luxembourg and France. A full re-use possibility as collateral for ECB open market operations can be arranged through Clearstream's integrated Collateral Management Services.
Marcel Naas, Managing Director of Eurex Repo GmbH, said, "The GC Pooling market has proven to be a reliable liquidity pool even in difficult market circumstances. The latest enhancement to French bonds as ECB eligible collateral increases the efficiency and cash funding potential for our participants."
Stefan Lepp, Head of Global Securities Financing, Clearstream, added, "The expansion to French securities creates a much larger collateral pool for Clearstream's clients. In times of uncertainty, we offer them the possibility to actively and closely manage their cash liquidity as well as to optimize the use of their collateral through Clearstream's wide range of Collateral Management Services."
In September 2008, the average outstanding volume in GC Pooling peaked at Euro 47 billion compared to Euro15 billion a year ago. A new record was set on 6 October with daily outstanding volume of Euro 56 billion. 28 Eurex Repo participants are currently active in this segment. GC Pooling also enables the settlement of high-volume transactions, and has already processed individual transactions in excess of Euro 10 billion.
GC Pooling was launched in March 2005. It is an innovative solution for the Euro Repo market, which offers participants three key benefits: trading on a fully electronic trading system including a central counterparty, an efficient collateral management service and the automated exchange of securities and money. GC Pooling allows banks to efficiently manage their liquidity and securities holdings.
Note to editorial staff:
Relayed links are contractual and technical arrangements for the transfer of securities involving at least three securities settlement systems (SSSs): the "investor" SSS, the "issuer" SSS and the "intermediary" SSS. The Governing Council of the ECB decided in January 2005 that relayed links may be used in the collateralisation of the credit operations of the Eurosystem, but only after an assessment has been carried out against the Eurosystem's standards to ensure that the conditions set by the Governing Council have been met.
The relayed link covered in this ad hoc assessment was put forward by the German central securities depository, CBF, acting as investor SSS, while CBL acts as the intermediary SSS between Euroclear France, the issuer SSS, and the investor SSS. The assessment has confirmed that this relayed link is eligible to be used in the collateralisation process of the Eurosystem's credit operations. The assessment also confirmed that the direct link from CBL to Euroclear France is considered eligible to participate in the collateralisation process of the Eurosystem's credit operations.
About Eurex Repo
Eurex Repo (www.eurexrepo.com) ranks among the leading markets for electronic repo trading and operates the CHF and EUR Repo Markets. The Eurex CHF Repo Market was launched in 1999, and the EUR Repo Market followed in 2001. More than 180 participants from nine countries are currently admitted to trading on Eurex's repo markets. Eurex Repo is the only platform in Europe to offer all of the advantages of electronic trading in combination with the anonymity of the central counterparty Eurex Clearing AG and Clearstream Banking's centralized collateral management system. Eurex Repo is a wholly-owned subsidiary of Eurex.
Repo trading allows banks to lend/borrow their security holdings in exchange for money and receive or grant liquidity as a result. The ECB and the majority of national European central banks use repo transactions to control money supply.
About Clearstream
Clearstream (www.clearstream.com) is an international securities depository and is responsible for post-trade services within Deutsche Börse Group. With its Global Securities Financing services, Clearstream offers settlement and custodial services along with instruments for collateral management. The service business comprises tri-party repo, securities lending and collateral management.
