Liquidity Hub GO
Collateral management outsourcing solutions for market infrastructures
Liquidity Hub GO (Global Outsourcing) provides market infrastructures such as central securities depositories (CSDs) or exchanges with an efficient way of providing their participants with customised collateral management services while underlying assets remain on local accounts and hence in the local jurisdiction.
Significant regulatory change, for example in Europe and in the US, has an enormous impact on the way financial institutions have to risk manage their financial exposures: the whole market needs better collateral management to unlock collateral buffers and optimise the usage of this scarce resource.
Market infrastructures are well positioned to provide support in the field of collateral management as they already act as a central service point for both asset holdings and market connectivity, whilst being a well regulated and neutral trustee not engaged in proprietary trading.
However, developing a new collateral management system from scratch is a complex, costly and time-consuming task which may not address the urgent requirements of the market participants in due time.
A unique service
The pioneering Liquidity Hub GO service enables market infrastructures to leverage Clearstream’s state-of-the-art collateral management capabilities. The service is offered on a white-labelled basis and does not require any contractual relationship between Clearstream and its partners’ clients. The infrastructure subscribing to the service will become a collateral agent in their own right and the services will be directly provided to their customers in the local market.
Clearstream calculates all the allocation, optimisation and substitution. The partnering market infrastructure then moves the assets accordingly on local accounts under domestic rules and regulations. Developing this service is quick and cost-effective and Clearstream is the only collateral management service provider able to offer this solution to other market infrastructures.
A global solution
The service gives market infrastructures the best of both worlds as it enables them to offer collateral management services in their own right while they also continue to benefit from Clearstream’s longstanding experience and the continuous enhancements to the Global Liquidity Hub.
Liquidity Hub GO is live with the Australian Securities Exchange ASX, the Brazilian CSD Cetip, the Spanish CSD Iberclear and the South African CSD Strate. Clearstream has also signed letters of intent with the CSDs of Canada, Singapore and Norway who plan to implement this service in their respective markets.
Liquidity Hub GO is the collateral management system of choice of The Liquidity Alliance.