Verdipapirsentralen ASA (VPS), the Norwegian central securities depository, and Clearstream have signed a letter of intent aimed at developing new collateral management services in Norway.
The new service will enable VPS to offer to Norwegian market participants the allocation, optimisation and substitution of collateral to cover domestic exposures.
VPS would offer these services on a white-labelled basis via Clearstream’s fully automated real-time collateral management engine, the Global Liquidity Hub.
As a unique feature of the Liquidity Hub GO service, assets remain on accounts in the local market environment.
Clearstream is the only collateral management services provider that is able to manage collateral across time zones and regions while the assets stay in the respective domestic market and under local legislation, according to the Deutsche Börse Group subsidiary.
Going forward, the partnership between VPS and Clearstream will also help Norwegian financial institutions and VPS customers to overcome internal collateral fragmentation across systems.
John-Arne Haugerud, CEO at VPS, said: “Our partnership with Clearstream will provide Norwegian financial institutions with the means to keep up with the increasing collateral requirements of Norwegian and international regulations.”
“From a risk perspective, it was particularly important that the underlying assets do not leave the Norwegian jurisdiction and this is guaranteed under the Liquidity Hub GO service. The Global Liquidity Hub offers more than a domestic solution and we will explore this potential along our journey with Clearstream.”
Stefan Lepp, member of the executive board and head of global securities financing at Clearstream, said: “The regulatory agenda requires banks and financial institutions to better manage their capital and liquidity buffers.”
“An efficient local and global collateral management service will become a must going forward—hence the growing popularity of our Liquidity Hub Go model through which our partners can offer sophisticated collateral management to their underlying clients without losing control over the assets. We are pleased about VPS joining our outsourcing service, thus including the first Scandinavian market in our global collateral management model.”
