Clearstream’s ICSD acts as a neutral agent for repo transactions. In addition to facilitating triparty repos amongst Clearstream clients, Clearstream also carries out the collateral management for repo trading through CCPs via GC Pooling and €GC services.

Triparty Repo

Launched in 1992, our triparty repo service enables clients to benefit from various sources of funding, combined with outsourced settlement and administrative functions as well as value-added services.

While cash providers have traditionally included central banks, sovereign institutions, commercial and supranational banks, triparty repos are also becoming increasingly attractive for buy side clients such as corporates, hedge funds and asset managers. They tend to favor triparty repos over more conventional money market instruments and bilateral repos because of their unique risk-return mix, combining a high degree of safety with additional yield pick-ups. Clearstream acts as a neutral triparty agent for both parties and offers a full range of services from trade opening to closing.

One of the reasons the buy side is increasingly using triparty repos is the reduction of the administrative burden previously associated with repos. In the past, clients had to sign many bilateral agreements with different counterparties. Clearstream has greatly simplified this process through a new legal master agreement for triparty repo transactions called the Clearstream Repurchase Conditions (CRC). The CRC gives the buy side instant access to a wide range of counterparties that have also signed under the same agreement. The job of the corporate treasurer is further simplified through a wide range of standardized collateral baskets that make it easy to get started in triparty repo.

To give corporate clients access to its services, Clearstream has also partnered with 360T, a multi-bank, multi-asset platform based in Germany which enables 360T’s corporate and institutional clients to trade triparty repos with a range of banks on the platform. Once the trade is agreed, it is routed automatically to Clearstream’s collateral management engine, with straight-through processing.

Clearstream offers a similar connectivity solution with Bloomberg's Professional service which enables straight-through processing of triparty repo transactions by supporting communications between market participants and buy side clients.

Cash providers in a triparty repo benefit from full collateral reuse: for example, they can use the securities received to cover CCP margin requirements in derivative obligations.

• Triparty Repo Product Sheet - Maximum Operational Efficiency for Repos

GC Pooling

Financial institutions looking for new liquidity pools and for cost-efficient, low-risk solutions may turn to our GC Pooling services which are experiencing high volumes and continuous growth.

GC Pooling offers a user-friendly electronic platform for secured money market trading on an anonymous basis for EUR, CHF, GBP and USD funding against standardized fixed income and equity collateral baskets as well as baskets of ECB-eligible securities which can be reused directly to access ECB credit facilities. Eurex Clearing steps in as a CCP, thereby ensuring anonymous trading plus an efficient, centralized risk management process across all products.

GC Pooling gives clients access to straight-through processing services from several Deutsche Börse Group entities through one single point of access: Eurex Repo provides the trading platform, Eurex Clearing clears the trade and Clearstream provides the settlement and the collateral management. We are constantly expanding our GC Pooling services globally to significantly increase the cross-border use of assets which enables you to take full advantage of our international platform.

Corporate clients can also benefit from the service via the Select Invest stream. They can use the platform as a daily cash management tool for cash lending via collateral baskets to pre-determined institutional borrowers, and still benefit from Eurex Clearing as a risk-absorbing central counterparty.

• Fact Sheet: GC Pooling
• Fact Sheet: GCP UMR Re-use
• Fact Sheet: Select Invest

Clearstream’s triparty securities lending services are part of our comprehensive offering for collateral management. Acting as neutral agent, Clearstream offers modular triparty loan and collateral management services supporting our clients to manage risks and liquidity more efficiently.

Securities lending can place great challenges on systems and operations for both lenders and borrowers. Our triparty services manage the post-trade complexities for securities lending through a sophisticated collateral engine with advanced functionalities and the use of extensive data fields. As such, clients save time and resources as operational tasks are delegated to our team of experts while having transparency on their activities and access to automated reporting and connectivity tools.

Collateralizing securities lending

Clearstream offers proven triparty collateral management features complemented by optional loan book valuation and settlement.

As market leader in the banking, funding and financing space, Clearstream manages collateral to cover all types of exposures in real-time, across currencies, asset classes and time zones while offering cash re-investment and collateral transformation services. This helps our clients to overcome fragmentation and manage their collateral from a single pool across repo, securities lending, derivatives and central bank activities amongst others.

Optimized asset allocation

Clearstream ensures the optimal (re-)use of collateral (cash, bonds, equities and funds) across products, counterparties and locations.

In addition, Clearstream also arranges loans for our clients through Automated Securities Lending (ASL) to prevent settlement failures and actively managed strategic securities lending. ASLplus complements this service with Clearstream as principal and single borrower keeping client risk minimal and increasing the lender’s portfolio yield.

Clearstream can collateralize various types of principal agreements that the counterparties may have entered into, such as:

• Bilateral cash loans;
• ISDA/CSA margining;
• Collateralization for central bank credit and liquidity programs;
• Collateralization for CCP margin requirements;
• Collateralization of securities lending transactions etc.

Unlike a repo trade, these are stand-alone transactions which are carried out by the counterparties independently of Clearstream. For example, the service can be used to cover an exposure resulting from a bilateral or OTC trade regardless of where the transaction was concluded. Clearstream simplifies the collateral administration for both the collateral receivers and the collateral givers.

Collateral is delivered free of payment from the collateral giver’s account to the collateral account. Clearstream performs a daily mark-to-market valuation of the collateral securities and instructs margin calls to keep the collateral value in line with the underlying exposure. Since Clearstream has no information on the underlying trade, any change in its value must be communicated by the counterparties.

Acting as a neutral agent and market infrastructure, Clearstream facilitates access to central bank operations thereby supporting its clients to manage risks and liquidity. As part of our triparty collateral management services, clients can use their eligible assets, either for monetary policy operations, or to obtain intraday liquidity in TARGET2, the Eurosystem payment settlement system.

Our pledge facilities for central bank borrowing in EUR are operated via the Banque Centrale du Luxembourg (Luxembourg central bank) (BCL) and the Deutsche Bundesbank (German central bank).

In addition to central bank borrowing in EUR, Clearstream also supports USD and SGD central bank liquidity via collateral pledges to the Federal Reserve Bank of New York (New York Fed) and the Monetary Authority of Singapore (MAS). Clients can leverage Clearstream’s services to secure different discount window USD borrowings at the New York Fed and USD/SGD borrowings at the MAS.

In order to benefit from central bank credit lines, clients must first be deemed eligible by the BCL, Deutsche Bundesbank, the New York Fed or the MAS, as appropriate. Clearstream acts as a neutral triparty agent throughout the collateral management lifecycle: from instruction matching to collateral allocation, valuation and substitution. The principal relationship remains between the central bank and the borrower.

In addition to domestic central bank pledge services, Clearstream facilitates cross-border triparty services in line with the Eurosystem model. Under this model, BCL either acts as the national central bank for domestic Luxembourg counterparties or as the corresponding central bank on behalf of other home central banks. For Clearstream clients in the euro area, this means that they can post collateral to their national central bank via the ICSD’s triparty collateral management services and pledge securities to the BCL.

• Collateral Pledge to Central Banks - New York Fed
• Collateral Pledge to Central Banks - MAS
• Cross-border Triparty Collateral Pledges to the Eurosystem

Regulators are pushing for an increasing number of trades to be cleared by CCPs. While this has the benefit of reducing counterparty risk, it also creates additional complexity, as each CCP has different clearing requirements. As a result, clients have to deal with a multitude of operational frameworks and collateral profiles.

As an experienced triparty collateral agent, Clearstream helps clients to make the most of their assets through an efficient use of collateral, thereby making expensive cash margins redundant. Clearstream clients who are also clearing members can use the Global Liquidity Hub’s full suite of automatic allocation, optimization and substitution services for their exposures with the following partner CCPs:

• BME Clear
• CME Clearing Europe
• Dubai Clearing Corporation
• Eurex Clearing
• EuroCCP (interoperability)
• ICE Clear Europe
• India International Clearing Corporation (IFSC) Limited
• LCH.Clearnet Ltd
• Oslo Clearing ASA
• X-Clear

This margining service is part of Clearstream’s wider efforts to give clients the best possible access to collateral locations around the world: both through strategic partnerships and by linking to globally fragmented exposure locations such as CCPs. Clients can use the Global Liquidity Hub to cover multiple exposure types: bilateral, central bank and CCP margining.

• Fact Sheet: Central Counterparty (CCP) Margining

Around the world, regulations such as EMIR and Dodd-Frank are imposing stringent margining requirements on OTC derivatives which will have a major impact on buyside and sell side clients. Clearstream’s Global Liquidity Hub offers initial margining services for both cleared and uncleared OTC derivatives from a single collateral pool.

Triparty margining services

The collateral needed for meeting the initial margin requirements for uncleared derivatives must be segregated at a non-affiliated third party custodian or triparty agent such as Clearstream. Clearstream’s account structure enables clients to hold multiple currencies and asset classes in a single location. The Global Liquidity Hub offers comprehensive triparty services for the segregation and management of initial margining for derivatives: the assets will be held in individually segregated accounts under a pledge structure in line with regulatory requirements. In addition, clients can benefit from standardized collateral baskets to meet the eligibility requirements of different regulations.

New legal master agreement

In addition to this advantageous operational setup, clients benefit from a simplified legal framework for the collateralization of internal margin coverage. Clearstream offers standardized contracts, comprising a collateral transfer agreement and the Clearstream Pledge Conditions (CPC), for governing the exchange of initial margin within the triparty service. Similarly to the successful Clearstream Repurchase Conditions (CRC), the Clearstream Pledge Conditions facilitate the engagement with a wide range of counterparties that have accepted the CPC.

Together with the collateral transfer agreement, the Clearstream Pledge Conditions set out a common framework for the core terms governing the exchange of initial margin using the ISDA standard framework documentation for OTC derivatives. Additional terms such as concentration limits, eligible collateral and haircuts can be tailored to each counterparty on a bilateral basis.

• Meet your EMIR requirements with Clearstream

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