UBS and HSBC conduct first ever renminbi triparty repo
06 December 2012 Brussels and Hong Kong
Image: Shutterstock
UBS London and HSBC, Hong Kong have completed their first renminbi (RMB) triparty repo using Euroclear Bank and the Hong Kong Monetary Authority (HKMA) as collateral management agents.
The bilateral agreement between HKMA and Euroclear Bank has allowed the transfer of securities as collateral from UBS London’s account in Euroclear bank—via Euroclear’s global collateral highway—to the HSBC Hong Kong branch’s account in HKMA to support the RMB repo.
The joint service has been initiated to enable international financial institutions to use securities held with Euroclear Bank as collateral in triparty repo transactions with members of the HKMA, to access liquidity from Hong Kong in renminbi and other currencies.
Justin Chan, deputy head of global markets APAC and head of Hong Kong trading, at HSBC, said: “HSBC estimates that by the end of 2015, the level of RMB deposits in Hong Kong will increase to a total of 30 percent from the current 9 percent of all Hong Kong deposits.”
“Firms that manage these growing RMB reserves will naturally seek to optimise their cash balances through the repo markets with an international counterparty base. It was easy and efficient to finalise the repo with UBS AG London, working through our local CSD account, operated by the HKMA.”
Olivier Grimonpont, general manager and regional head, APAC, at Euroclear, said: “The HKMA and Euroclear Bank are pleased to serve the needs of domestic and international market participants in managing their collateral for RMB and other types of repo and securities lending deals.”
“Working successfully with HSBC and UBS to fulfil their collateral management requirements proves that together we can source and maintain collateral from Hong Kong, London or almost anywhere else to sustain vital liquidity channels.”
The bilateral agreement between HKMA and Euroclear Bank has allowed the transfer of securities as collateral from UBS London’s account in Euroclear bank—via Euroclear’s global collateral highway—to the HSBC Hong Kong branch’s account in HKMA to support the RMB repo.
The joint service has been initiated to enable international financial institutions to use securities held with Euroclear Bank as collateral in triparty repo transactions with members of the HKMA, to access liquidity from Hong Kong in renminbi and other currencies.
Justin Chan, deputy head of global markets APAC and head of Hong Kong trading, at HSBC, said: “HSBC estimates that by the end of 2015, the level of RMB deposits in Hong Kong will increase to a total of 30 percent from the current 9 percent of all Hong Kong deposits.”
“Firms that manage these growing RMB reserves will naturally seek to optimise their cash balances through the repo markets with an international counterparty base. It was easy and efficient to finalise the repo with UBS AG London, working through our local CSD account, operated by the HKMA.”
Olivier Grimonpont, general manager and regional head, APAC, at Euroclear, said: “The HKMA and Euroclear Bank are pleased to serve the needs of domestic and international market participants in managing their collateral for RMB and other types of repo and securities lending deals.”
“Working successfully with HSBC and UBS to fulfil their collateral management requirements proves that together we can source and maintain collateral from Hong Kong, London or almost anywhere else to sustain vital liquidity channels.”
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