Eurex Repo, Eurex Clearing and Clearstream, all part of Deutsche Boerse Group, are to introduce an extension of the integrated and innovative GC Pooling market for secured funding, which will be made available for active GC Pooling participants (banks) to further strengthen their service scope towards corporate customers. Launch is scheduled for Q4 2012.
The leading GC Pooling marketplace for secured interbank transactions will be enhanced to contribute to re-building trust between banks and their existing non-financial customers, e.g. corporates, asset managers and pension funds. The new market segment GC Pooling Select will be specifically designed for secured short-term cash investments from non-financial clients to banks to avoid the systemic risks of unsecured money market operations.
Eurex Repo’s new market segment aims to support the growing need of non-financial institutions for secured funding by adding the known benefits of GC Pooling, i.e. electronic trade entry, mitigation of counterparty risk via Eurex Clearing’s central counterparty (CCP) and state-of-the-art collateral management of Clearstream Banking. These advantages will be added to the existing GC Pooling structure as the existing relationships between banks and their corporate clients will remain unchanged.
Benefits for the current participants of GC Pooling are additional flow without further investments on their side while keeping the positive effects of risk and balance sheet netting. The most important benefits for corporate clients are the mitigation of any counterparty risk, as their cash activities are protected through the inclusion of Eurex Clearing’s CCP. Simultaneously, all cash and collateral management functionalities will be handled within Clearstream’s Liquidity Hub including a seamless integration of the two market segments to ensure an optimised cash and collateral usage. To enter into the new market, very limited efforts are required on the client’s side.
“Our new GC Pooling Select market segment is designed to enhance the existing market infrastructure. We will preserve the relationships between banks and their non-financial clients but will enable them to benefit from our integrated combination of electronic trading and processing, central clearing and collateral management”, says Marcel Naas, Managing Director at Eurex Repo.
“With this pioneering service concept, the industry will have access to the first electronic “B2C” money market trading facility incorporating a central counterparty without impacting the important relationships between banks and non-financial-institutions. The full integration of all collateral management services offered by Clearstream will lead to further optimised, transparent and consolidated collateral and liquidity management reducing collateral fragmentation and the related risks and costs”, says Stefan Lepp, Chief Executive Officer of Clearstream Banking AG, Frankfurt.
