Investment Funds as Collateral

Clearstream responded to the growing market need for collateral by including investment funds in the list of eligible asset classes. Investment funds can thus be used as collateral to efficiently secure financial transactions involving counterparty risk.

Our well-established Global Liquidity Hub can  easily accommodate classic investment funds, ETFs and publicly-traded investment funds as eligible asset classes. This allows asset owners to post investment funds as collateral where they would once have been limited to equities, bonds or even cash.

Funds are just another asset class that benefit from the same centralised collateral management process.
Allowing funds as collateral is not only a response to a concrete market requirement, but it also creates a new distribution opportunity for investment managers. Users of collateral - such as banks, asset managers and treasurers - have an alternative to cash collateral that is more secure and potentially less costly.

Money market funds as collateral

As part of our flexible collateral management solutions collateral givers can seamlessly invest in money market funds (MMFs) as they open triparty transactions.

Clients who wish to use cash as collateral in triparty collateral management transactions can opt to transform their cash into MMFs to cover their exposure. This fast and efficient solution allows collateral givers to receive a return on their cash while avoiding reinvestment risks for the collateral receivers. Both counterparts can benefit from the transformation - a clear win-win.