Clearstream, the post-trade services arm of Deutsche Börse, has teamed up with collateral exchange platform ColleX, looking to improve pricing and liquidity for secured lending transactions. The partnership comes amidst a consolidation of liquidity, which will look to help allay issues caused by market fragmentation with regard to post-trade settlement processes.
The accord will emphasize optimal, more transparent pricing and liquidity, which will leverage Clearstream’s simplified collateral management services. The primary impetus behind the collaboration is the need to address concerns surrounding the operational lifecycle of tri-party repo transactions. Tri-party repos are typically utilized by large securities firms and bank holding companies with broker-dealer operations in a bid to garner short-term financing from cash investors, such as money-market mutual funds.
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With a number of industry challenges and vulnerabilities facing this space, Clearstream opted to roll out its Clearstream Repurchase Conditions (CRC), which was designed to help simplify tri-party repo and its respective settlement processes. The joint agreement will see the CRC combined with ColleX’s platform capabilities, which deploys trade negotiation technology via Auction, Order Book and Request for Quote.
In particular, this combination will cater to buy-side clients – the CRC currently supports a plethora of traditional dealer counterparts, to insurers and corporate treasurers looking for secured funding. Teaming up with ColleX’s platform will also help support bank-to-bank and peer-to-peer (P2P) liquidity as well.
Glen Stone, Head of ColleX, commented: “By coupling Clearstream’s capability to manage the operational lifecycle of tri-party repo transactions with the ColleX trading technology (Order Book, RFQ and Auction), ColleX is offering price discovery and best execution to further streamline and simplify a historically fragmented and difficult to access market.”
“Our partnership with collateral exchange platform ColleX speaks to our commitment to further increase collateral efficiency by entering into successful collaborations. Providing our buy-side clients with a simplified access to tri-party collateral management, creating a single collateral pool and exploring re-use and netting opportunities are among the objectives of our new Global Funding and Financing product offering,” explained Marcel Naas, Head of Global Funding and Financing at Deutsche Börse Group.