Triparty securities lending
Clearstream offers triparty collateral management and settlement services for bilaterally-agreed loans of securities. There are two types of triparty securities lending services (TSLS).
While collateral management and loan valuation are included in both services, the underlying loan is only settled in Clearstream’s ICSD triparty framework under TSLS1. Under TSLS2, the loan is settled bilaterally between the two counterparties outside Clearstream.
TSLS1 is a comprehensive service that provides complete settlement and valuation of a securities loan as well as the related collateral management for the duration of the trade. The simultaneous exchange of the loaned securities against collateral enables the settlement of both sides of the transaction, reducing risk and increasing efficiency.
TSLS2 provides collateral management and valuation services but not the settlement of loaned securities, as the latter is done bilaterally. The counterparties must provide Clearstream’s ICSD with the details of the loan, so that Clearstream can perform the valuation. The collateral and the loan securities are marked to market on a daily basis, and margin calls are performed if required. The collateral is settled free of payment.
The independent safekeeping and monitoring provided by Clearstream’s triparty securities lending services dramatically reduces the back office burden and operational risk of collateral management for both lenders and borrowers of securities.
As a neutral triparty agent, Clearstream performs the settlement and monitoring of the securities lending transaction right through to maturity; including automatic collateral selection, mark to market and margin calls.
Triparty Securities Lending Services product sheet (Efficient collateral management to cover your loan books)