61 percent of financial institutions still have a long way to go to establish a collateral management strategy, shows Clearstream summit poll

Sourcing the most appropriate collateral to cover global exposures is increasingly a top priority for financial institutions, yet most still have 'much work to undertake' to establish a clear approach to their collateral management needs. These findings are according to an anonymous poll of banking professionals at Clearstream’s 18th Global Securities Financing Summit held on 22 and 23 January 2014 in Luxembourg. The Clearstream GSF Summit brought together more than 850 delegates from across the globe to take forward the global securities financing agenda.

Some 95 percent of the delegates - who represent pan-regional institutions, infrastructures, investment banks, universal banks and central banks from across the global - expressed that sourcing the most appropriate collateral to meet new industry practices has risen up their institution’s agenda in the past 12 months. At the same time, more than 61 percent of the delegates agreed that their financial institution still had some way to go to establish a clear strategy, approach and measures to address future collateral management needs. According to the poll, only 13 percent had already reached readiness.

Additionally, in light of upcoming regulatory requirements worldwide for financing to be more collateralised, 85 percent of the delegates (strongly) agreed that triparty repos would become increasingly attractive to corporates as a replacement to cash deposits, whereby the triparty repo option offers a more securitised alternative. A triparty repo is a transaction for which collateral selection and substitution, valuation, settlement and custody during the life of the repo transaction is outsourced by the two trading parties to a third-party agent.

Stefan Lepp, Head of Global Securities Financing and Executive Board Member at Clearstream, said the poll results clearly demonstrated that overcoming the collateral challenge remained a global issue that required continued attention and support from industry experts to help financial institutions and corporates meet the emerging capital requirements.

'The financial community knows that it needs to get smarter about its collateral management operations to help de-risk the markets and comply with regulatory requirements', Stefan Lepp commented. 'Yet while we know that collateral is in theory available, much of it remains fragmented and difficult to unlock and mobilise, which comes at a high cost. At the same time, creating new systemic risk by pooling collateral in a single place must be avoided. Our Global Liquidity Hub solution, which provides access to collateral that often continues to be held with our global strategic partners, is increasingly emerging as best-practice solution for the industry.'

About Clearstream

Clearstream is the post-trade services and global liquidity provider within Deutsche Börse Group. As an international central securities depository (ICSD) headquartered in Luxembourg, Clearstream provides the post-trade infrastructure for the Eurobond market and services for securities from 53 domestic markets worldwide. Clearstream’s customers comprise approximately 2,500 financial institutions in more than 110 countries. Its services include the issuance, settlement and custody of securities, as well as investment fund services and global securities financing. With EUR 12.0 trillion in assets under custody, Clearstream is one of the world’s largest settlement and custody firms for domestic and international securities. As a central securities depository (CSD) based in Frankfurt, Clearstream also provides the post-trade infrastructure for the German securities industry. Further information: www.clearstream.com

Media contact

Jessica Sicre, +352-243-32232
jessica.sicre@clearstream.com