Clearstream and ICE Clear Europe have launched a collaborative tri-party margin collateral management service, much to the delight of major banks as they look to overcome international rules on margin levels.
The partnership will enable clearing members of ICE Clear Europe to use their assets held at Clearstream to manage their margin requirements, presenting significant cost savings to banks as it allows greater flexibility for posting high grade collateral to meet CCP margin requirements.
One of the main challenges facing the industry is finding enough high quality collateral, such as cash and government bonds, required from clearing houses.
By connecting to Clearstream’s collateral management engine, the Global Liquidity Hub, securities can be pooled to make it available for meeting margin requirements, via the tri-party collateral management service.
ICE Clear Europe customers will now benefit from streamlined tri-party collateral management through our Global Liquidity Hub,” says Stefan Lepp, head of global securities financing, Clearstream.
“This new partnership is part of our strategy of enabling customers to use the Global Liquidity Hub as a single source of liquidity to collateralise multiple global exposures in a streamlined and optimised manner. More importantly, users of the Global Liquidity Hub will be able to manage all cleared activities from a single location."
The venture also marks the first step for ICE Clear Europe into the tri-party market.
“Clearstream's tri-party collateral solution provides ICE Clear Europe members with an additional and efficient way of meeting initial margin requirements, via one of the best linked collateral pools globally," adds Paul Swann, president, ICE Clear Europe.