Clearstream and Belfius have agreed to develop a new collateral management activity for bilateral trades, focusing on over-the-counter (OTC) derivatives and aimed primarily at corporates and medium-sized banks.
The service, which will leverage Belfius’ specialist experience, will be white-labelled by Clearstream and offered to its clients.
It is expected that the new outsourced service will be launched in 2013 following the signature of a letter of intent.
The deal is the latest in a number of strategic partnerships created by Clearstream as it extends the reach and capabilities of its Global Liquidity Hub, a collateral management environment delivering worldwide services across borders, asset classes, time zones and products on an open architecture basis.
The partnership with Belfius will enable Clearstream customers to further bolster the globally unified collateral pool that bridges the bilateral and tri-party worlds and will optimise collateral management across both cleared and uncleared OTC derivative trades by further reducing collateral fragmentation.
The new service will be compliant with the best practices and standards in the European Market Infrastructure Regulation (EMIR) that will be enacted this summer. Clearstream will particularly target mid-sized banks and buy-side customers and will offer margin calls, dispute management, portfolio reconciliation, legal contract review and administration, payments and settlements reporting, a cash reinvestment mechanism and collateral transformation.
Stefan Lepp (pictured), head of global securities financing at Clearstream, says: “We’re delighted to be working in partnership with Belfius and to be expanding our service portfolio both to buy and sell-sides as collateral management is a priority right across our industry. With this unique service, we are able to address the growing pressure triggered by regulatory changes in the OTC derivatives world on a short time-to-market basis by combining the outstanding expertise of Belfius with the state of the art collateral management product range of Clearstream. Forging strategic partnerships with key industry players is an important part of Clearstream’s business model and we are sure our relationship with Belfius will be very beneficial for our customers.”
Luc Van Thielen, chief operations officer at Belfius Bank, says: “This is the recognition, by a well-regarded market player, that Belfius has robust collateral management processes in place. Especially in the changing context of EMIR, this partnership can be of real added value to the market for players active in the OTC derivative space. The OTC collateral management services will be an important complement to Clearstream’s service offering and will fit seamlessly into the Global Liquidity Hub.”