Singapore Exchange partners with Clearstream for Asian collateral service
The Singapore Exchange and Clearstream will target Asia’s need for collateral
The Singapore Exchange and Luxembourg-based Clearstream are planning to launch a collateral management service that should help customers use assets as collateral at SGX’s securities depository CDP.
Under the deal, SGX uses Clearstream’s collateral management infrastructure, the global liquidity hub, and offers its own liquidity hub GO service to enable collateral to be allocated, optimised and substituted automatically in real time. The point of the deal is essentially to market a source of high-quality collateral in Asia.
“We are delighted to expand the Liquidity Hub GO partnership model to Singapore Exchange and to bring our unique collateral management outsourcing solution to Asia,” said Jeffrey Tessler, chief executive of Clearstream. “Together with SGX, we will be able to develop a tailor-made collateral management solution for Singapore in a very short time-to-market. High quality collateral is scarce and increasingly expensive – making it available is also a top industry priority in Asia. SGX and Clearstream will soon be able to jointly address this major industry challenge for the Singapore and Asian markets.”
Global financial reforms such as Basel III, Dodd-Frank and EMIR require banks to set aside more collateral, and to transfer the bulk of OTC derivatives contracts onto central clearing – meaning that more collateral must be placed as margin.
Clearstream’s liquidity hub GO service went live with the Brazilian CSD Cetip in July 2011 and is due to be launched with ASX in Australia, the South African CSD Strate and Spain’s Iberclear before the end of this year.
Meanwhile earlier this month, Clearstream announced plans with Germany’s Commerzbank to launch a new service designed to help customers prepare for central clearing of OTC derivatives. The new TradeCycle service will be designed to aid firms managing OTC derivatives, covering trading, clearing, settlement, custody, and services within these such as advisory, valuation and collateral management. It is scheduled to launch in Q4 2013.
