Eurex Repo creates pan-European market for collateralised money market transactions
Eurex Repo, the electronic repo market of the international derivatives exchange Eurex, will internationalise its Euro GC Pooling offering with European collaterals, thus becoming the first electronic market in Europe to enable cross-border liquidity management via a wide range of European Central Bank-eligible collateral.
As of September 3, the scale of available securities holdings for Euro GC Pooling transactions will be extended from German bonds to include Eurobonds and a wide range of European bonds. The collateral basket can also be used as collateral for refinancing within the framework of ECB open market transactions.
This enhancement of automated straight-through processing in managing securities holdings for Euro GC Pooling transactions is possible through the connection of Clearstream Banking Frankfurt and Clearstream Banking Luxembourg, whose customers will be able to use more than 8,000 securities as collateral in Euro GC Pooling.
'This extension of Euro GC Pooling offers a unique combination of collateralized money market trading with the efficiency of Eurex Clearing's central counterparty,' says Marcel Naas, managing director of Eurex Repo. 'It also illustrates the synergies within Deutsche Börse Group as it is a joint initiative of Eurex and Clearstream for the benefits of our customers.'
Stefan Lepp, head of global securities financing at Clearstream, says: 'This is a significant step forward for the streamlining and automation of collateral management in Europe. The expansion of Euro GC Pooling creates a much larger collateral pool for Clearstream's clients.
'They will be able to actively manage their euro liquidity as well as to optimise the use of their collateral through the access to Clearstream's range of triparty collateral management offering.'
In August, the daily average outstanding volume in Euro GC Pooling reached EUR17bn, following average annual growth of 48 percent since its launch in March 2005. Twenty Eurex Repo participants are currently active in this segment. Euro GC Pooling also enables the settlement of high-volume transactions, and has already processed individual transactions in excess of EUR10bn.
Euro GC Pooling allows banks to efficiently manage their liquidity and securities holdings, offering participants a fully electronic trading system including a central counterparty, an efficient collateral management service and the automated exchange of securities and money.
Eurex Repo operates the Swiss franc and euro repo markets, launched in 1999 and 2001 respectively, with 180 participants from nine countries currently admitted to trading. Eurex Repo offers electronic trading in combination with the anonymity of the central counterparty Eurex Clearing and Clearstream Banking's centralised collateral management system.
Repo trading allows banks to lend or borrow their securities 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.
Clearstream is an international securities depository and the post-trade arm of the Deutsche Börse Group, offering settlement and custody services as well as collateral management tools through its global securities financing services. The combined services include triparty repo, securities lending and collateral management.
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