Private bank Brown Brothers Harriman (BBH) says it will now support CME Clearing's fourth interest earning facility (IEF4) program, which helps futures commission merchants (FCMs) optimize margin deployment for listed and cleared OTC swaps.
The IEF4 initiative provides market participants the choice to deposit corporate bonds into a pledged tri-party custody account at BBH, creating opportunities for more efficient OTC clearing and margin collateral usage.
The move is expected to benefit the bank's asset manager, insurance, broker-dealer, and clearinghouse clients, while its settlement banking customers will also see functionality, efficiency, transparency, and future process improvements as a result of tighter integration between BBH’s ComSet Plus settlement banking platform and the CME Clearing enhanced collateral management program.
“BBH is focused on bringing flexibility, efficiency, and integration to all touch points in the collateral lifecycle. CME’s IEF4 program is an important part of this strategy as industry attention moves away from preparing for compliance with mandatory clearing rules, towards improving the efficiency of collateral solutions. Regardless of where in the collateral lifecycle an entity sits, this should be what they are thinking about,” says Stephen Bruel, BBH's head of derivatives product management.
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