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GFF Summit 2019: Bringing CCP-specific benefits to the securities lending market

Release date: 23 Jan 2019 | Eurex Exchange, Eurex Clearing

GFF Summit 2019: Bringing CCP-specific benefits to the securities lending market

By Gerard Denham, Funding & Financing Sales, Eurex Clearing AG

The implementation of EMIR in Europe and the Dodd Frank Act in the US to reduce systemic counterparty and operational risk has imposed the requirement for counterparties to centrally clear eligible OTC derivative trades and to post initial margin and variation margin against non-cleared derivatives transactions. The shortage of high-quality collateral has stimulated the demand for securities lending to be increasingly utilized through secure and efficient programs.

Engaging with market participants

Eurex Clearing’s proven Lending CCP – jointly with a core group of strategic partners such as BNY Mellon, BlackRock, Citi, PGGM, Natixis and Morgan Stanley – has been able to enhance the security and efficiency of a market that has been traditionally defined by OTC bilateral transactions. The Lending CCP operates an integrated solution for securities lending transactions, while providing the possibility to maintain existing business relationships between market participants. Ongoing regulatory developments such as Basel III finalization, CSDR, LCR, SFTR and collateral pledge agreements are driving firms to analyze the impact on the securities lending market. The Lending CCP offers flexible collateral options for both cash and securities as collateral and incorporates the use of triparty collateral management services. Borrowers benefit from increased margin utilization across cleared products as well as a greater capability to allow for efficient re-use of collateral.

Addressing beneficial owner’s needs

Beneficial owners can easily participate in a CCP model without a requirement to provide margin and pay default fund contributions.

This year’s Global Funding and Financing (GFF) Summit takes place from 29 to 31 January. Please find the agenda here