A new EU regulated marketplace for collateral and secured deposits, aims to go live in the last quarter of 2015, with Euroclear acting as the platform’s tri-party agent in Europe.
The new London-based venue, named DBV-X, will be operated by Swiss interdealer broker Tradition, and will offer market participants access to a range of counterparties and high-quality liquid assets. All participants sign a single standard legal agreement to join the platform and have full control over the products and counterparties used.
Corporates, asset managers, pension funds, insurance companies, hedge funds, brokers, dealers and banks will have free and open access to the platform. Using standardised products and processes, these firms will have access to a range of maturities, currencies and collateral options, with a choice of tri-party or CCP cleared trades.
The platform will offer full pre-trade counterparty anonymity, price transparency and a choice of execution models. Market participants are able to trade automatically within their risk limits to access a wide range of standardised liquid general collateral (GC) “baskets”, encompassing a range of eligible assets including government and corporate bonds. This enables customers to invest/raise cash against collateral (repo), perform collateral upgrades or generate additional yield according to their individual investment, funding and margin requirements.
DVB-X has adopted Euroclear’s RepoAccess GMRA based legal model, which intends to make counterparty diversification simple, fast and more efficient.
John Wilson, managing director, Tradition and Head of DBV-X, said: “The current regulatory and economic environment is driving fundamental change in funding and collateral markets – OTC clearing, the impact of leverage ratios on repo activity by banks and LCR on short-term deposits – as well as a clear shift away from unsecured collateral to secured deposits. This is driving the need for all firms to re-assess their treasury strategies and consider diversifying their counterparties.”
“By offering full STP from order to execution to settlement, same-day settlement is enabled through Euroclear’s market leading Collateral Highway.”