Dubai and Clearstream cooperate in collateral 11 October 2013Dubai Reporter: Georgina Lavers
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Clearstream’s global liquidity hub has its first Middle Eastern central counterparty (CCP) link.
The Dubai Commodities Clearing Corporation (DCCC), which is the CCP of the Dubai Gold & Commodities Exchange, has agreed to cooperate on collateral management for CCP margining.
By the end of the first quarter of 2014, Dubai’s exchange customers will be able to use the collateral pools of Clearstream and its partners to meet margin requirements at DCCC through the hub.
The hub aims to enable market participants to manage a growing number of worldwide exposures on a fully automated basis out of a single, global collateral pool, which consolidates assets held at Clearstream and with its partners.
Gary Anderson, CEO of Dubai Gold & Commodities Exchange (DGCX), said: “Partnerships like these are key building blocks in our efforts to transform the Middle East’s derivatives marketplace and become a key hub in the global liquidity infrastructure map. Demand for collateral is expected to grow significantly, driven by both market forces and regulatory reform, and DGCX is keen to support its members in deploying collateral optimally without fragmentation.”
Gaurang Desai, the chief operating officer of DCCC, said that the partnership with Clearstream strengthened the overall offering for DGCX members with a service that promotes significant efficiency gains in managing and transferring collateral.
“This alliance takes our strategic efforts of being the CCP of choice in the region a notch further by providing products and services of international standards to our customers. The Clearstream alliance not only allows us to help our members in addressing key liquidity requirements but also in creating new value and revenue opportunities through improved collateral management.”
Stefan Lepp, head of global securities financing and member of the executive board of Clearstream, said that Clearstream’s strategy is to grant the market access to a growing number of exposure locations such as globally fragmented CCPs while at the same time connecting to an increasing number of collateral locations.
“The most important and unique feature of our open model is that the collateral remains in its current environment and with our partner CSDs, with agent bank and with global custodian partners.”
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