Published On: Thu, Jan 29th, 2015

BNY Mellon and State Street collaborate with Eurex Clearing on Securities Lending CCP Solution

Matthias Graulich, Chief Client Officer, Eurex Clearing Executive Board

Matthias Graulich, Chief Client Officer, Eurex Clearing Executive Board

Eurex Clearing, Europe’s leading clearing house and part of Deutsche Börse Group, announced a collaboration with BNY Mellon and State Street, two of the world’s leading providers of financial services to institutional investors and two of the largest securities lending agents. The parties intend to work together strategically to further enhance the Eurex Clearing service to meet the specific needs of beneficial owners, as well as to explore expanding the geographic reach into the US. Additionally BNY Mellon and State Street will aim to provide access for their clients to the Eurex Clearing’s Lending CCP service.

“BNY Mellon’s commitment to the securities financing business is long-running and widely recognized. We are continually monitoring the regulatory and structural changes taking place in this market and view central clearing as a key additional distribution method that will help to support market demand for our clients’ securities,” said James Slater, Executive Vice President and BNY Mellon’s Global Head of Securities Finance. “Together with Eurex Clearing and State Street, we look forward to further enhancements to the clearing model for agent lenders and beneficial owners.”

“The unique model of Eurex Clearing, by allowing beneficial owners direct CCP access via its Specific Lender License, provides significant benefits to market participants. As a recognized global leader in securities lending, we see benefits for our clients in a service that is tailored to the specific needs of the securities financing space, preserving the relationship driven business structure and at the same time delivering the capital efficiency and safety

associated with central clearing. State Street looks forward to this collaboration with BNY Mellon and Eurex Clearing and other industry participants, with the joint objective to further enhance this service,” added Lou Maiuri, Executive Vice President and Head of Securities Finance, State Street.

“We are very proud to collaborate with these two industry leaders in the further development and enhancement of our Lending CCP. This reaffirms the uniqueness and strong value proposition of our CCP service for the securities lending business. We are looking forward to working together with BNY Mellon and State Street to leverage their expertise and network to further enhance our Lending CCP,” said Matthias Graulich, Chief Client Officer and member of the Eurex Clearing Executive Board.

Eurex Clearing’s Securities Lending CCP was launched in November 2012. The existing product scope includes equities from Belgium, France, Germany, the Netherlands and Switzerland as well as a wide range of international fixed-income instruments and exchange-traded funds. Six clearing members have already been admitted to the service and have cleared first transactions. Further market participants are in the admission and on-boarding process.

A unique feature of Eurex Clearing’s Securities Lending CCP is a Specific Lender License that benefits both Agent Lenders and their Beneficial Owners. This allows for greater participation by the buy-side by offering tiered membership, thus increasing the liquidity available to clients. With this set-up, it preserves the special structure of the securities lending market and offers the capital efficiency and safety associated with central clearing. The Securities Lending CCP service is based on Eurex Clearing’s established systems and industry leading risk management standards. Securities lending transactions from Eurex Repo’s SecLend Market or via Pirum’s CCP Gateway can be cleared by Eurex Clearing. The service is integrated currently with two tri-party collateral agents, Clearstream Banking Luxembourg and Euroclear Bank.

IRP Journal

Opinion Poll