Eurex Clearing is set to establish the first European central counterparty (CCP) for the bilateral securities lending market, the company has announced.
The CCP will have a limited launch on 22 November, covering a select range of banks and assets in order to test processes. The service will later be rolled out from German and Swiss blue-chip stocks and certain exchange-traded funds (ETFs) to encompass loans on equities and various fixed income products, as well as further ETFs.
The platform will incorporate Eurex Clearing's lending CCP technology, along with that from Eurex Repo's SecLend line and Pirum System's real-time technology for bilateral over-the-counter (OTC) transactions, as well as Clearstream Banking Luxembourg and Euroclear Bank's tri-party collateral management services.
"Our new clearing offering for securities lending has been designed with support from key market participants who have committed to utilize the service to achieve a substantial reduction in capital allocation. We have completed testing of our offering and are ready to start a pilot phase with our early adopters," says Thomas Book, member of the executive board at Eurex. "Our set up will enable customers to make use of their existing connectivity to these dynamic service providers for trade and collateral management and to take the benefit of substantial improvements to the current market structure by delivering significant capital and operational benefits to all participants."
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