GSF: Collateral likes to move it move it
22 January 2014 Luxembourg
Image: Shutterstock
Collateral mobilisation is becoming increasingly important to the financial markets, according to an expert speaking at the 18th Global Securities Finance Summit in Luxembourg.
Attendees of the event, which is hosted by Clearstream of the Deutsche Börse Group, heard from Oscar Huettner, formerly BondLend product manager and currently a consultant at Finadium, who was part of a panel providing views on the market.
He said that developing an institution’s ability to move collateral from one location to another is a key step in optimising the collateral process.
Huettner pointed to Clearstream’s global liquidity hub, which offers a range of management services, as a useful means of mobilising collateral, particularly cross-border.
Clearstream executive board member Philip Brown turned the panel on to TARGET-2 Securities (T2S), an initiative that will offer centralised settlement of central bank money across all European securities markets.
A PricewaterhouseCoopers/Clearstream survey, conducted in December 2013, showed additional benefits to T2S above and beyond basic settlement, said Brown. “The T2S platform will facilitate solutions that will affect the profit and loss of banks.”
Brown said that the survey highlighted multiple benefits to T2S, with liquidity and funding having the most to gain from the settlement platform.
The settlement platform will allow institutions to pool cash, which must currently be held in each European market, into a single account, reducing their reliance on liquidity, said Brown, who added that Clearstream stands to reduce its liquidity usage by 15 percent under T2S.
T2S will also act as a “single funding source in Europe”, potentially saving institutions tens of billions in collateral.
Attendees of the event, which is hosted by Clearstream of the Deutsche Börse Group, heard from Oscar Huettner, formerly BondLend product manager and currently a consultant at Finadium, who was part of a panel providing views on the market.
He said that developing an institution’s ability to move collateral from one location to another is a key step in optimising the collateral process.
Huettner pointed to Clearstream’s global liquidity hub, which offers a range of management services, as a useful means of mobilising collateral, particularly cross-border.
Clearstream executive board member Philip Brown turned the panel on to TARGET-2 Securities (T2S), an initiative that will offer centralised settlement of central bank money across all European securities markets.
A PricewaterhouseCoopers/Clearstream survey, conducted in December 2013, showed additional benefits to T2S above and beyond basic settlement, said Brown. “The T2S platform will facilitate solutions that will affect the profit and loss of banks.”
Brown said that the survey highlighted multiple benefits to T2S, with liquidity and funding having the most to gain from the settlement platform.
The settlement platform will allow institutions to pool cash, which must currently be held in each European market, into a single account, reducing their reliance on liquidity, said Brown, who added that Clearstream stands to reduce its liquidity usage by 15 percent under T2S.
T2S will also act as a “single funding source in Europe”, potentially saving institutions tens of billions in collateral.
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