Clearstream and BNP Paribas Securities Services have teamed up for the ICSD's collateral management service for agent banks.
Liquidity Hub Connect will allow client assets to remain with BNP while Clearstream manages global collateral allocation, optimisation and exposure coverage. That means BNP's customers will be able to consolidate their collateral holdings via Clearstream's Global Liquidity Hub to cover their global exposures from a single pool.
Pooling collateral across the globe in one central hub while allowing it to remain in its custody location, with agent banks or CSDs, is intended to reduce costs while ensuring security of assets. According to one estimate from research by Accenture and Clearstream, the financial services industry could save more than €4 billion by addressing operational inefficiencies associated with collateral management practices.
Jeffrey Tessler, CEO Clearstream, said, “We are delighted to extend our long-term partnership with BNP Paribas to add a fourth layer to our Global Liquidity Hub initiative: partnerships with agent banks. Liquidity Hub Connect builds on our established quad-party collateral management service
established with them five years ago. This is a further example of Clearstream’s commitment to strong partnership and we are expecting to add further agent banks to the model over the course of the coming months.”
This latest development builds on the success of the Liquidity Hub GO (Global Outsourcing) initiative Clearstream launched with Cetip, the Brazilian CSD, in July 2011. Liquidity Hub GO is now also being discussed with the Australian Securities Exchange and Strate, the South African CSD.
The differentiating factor of the service offering is that collateral can be managed across time zones and regions while assets stay in their respective domestic market under local legislation.
