HQLAX collaborates on collateral mobility initiative
10 December 2024 US
Image: Christian/stock/adobe.com
HQLAX has announced the conclusion of a feasibility initiative to address pain points in triparty collateral mobility.
The initiative saw the firm design a new operating model which uses its platform to transfer securities collateral to (or between) multiple triparty agents, without triggering cross-custodian settlements.
“The industry has been trying to solve for triparty interoperability for over 20 years, and we are very excited that our feasibility study confirmed our platform as a scalable industry wide solution for collateral mobility across triparty agents and custodians,” says Guido Stroemer, HQLAX CEO. “The solution is here, now it’s up to the industry to implement it.”
HQLAX says the achievement marks a significant step forward in settlement speed and efficiency, and so banks will be able to take advantage of longer intraday settlement windows, and the ability to instruct transfers directly between triparty agents.
It was concluded with the help of a number of market participants banks (including HSBC, UBS, Standard Chartered), triparty agents (including J.P. Morgan, Clearstream), and service providers (including Transcend, Pirum).
These groups all joined HQLAX and Deutsche Börse Group in formulating the target operating model.
According to HQLAX, adopting this model will increase the speed and precision of collateral management activities, while reducing operating costs and risks for participants.
This new model allows banks to fulfil collateral obligations in triparty without needing to deliver securities out of their home custodian’s accounts, the firm adds.
The group created a “legally secure and deliverable design” and will now validate the business case in more detail with the intention to mobilise resources in 2025.
Commenting on the news, Bimal Kadikar, Transcend CEO, adds: “Clients need the ability to effectively deploy assets across venues to increase liquidity value and lower costs. The technologies are now available to meet this challenge and industry providers have the opportunity to adapt and meet these client demands.”
Todd Crowther, head of collateral services at Pirum, comments: “Pirum is delighted to be involved in the HQLAX working group, which reinforces our commitment to supporting clients with connectivity to the wider ecosystem of current and future technology solutions.
“This collaboration is a key pillar of our CollateralConnect vision of utilising digital platforms to drive further efficiencies in collateral management.”
Marton Szigeti, head of Collateral, Lending and Liquidity Solutions at Clearstream, explains: “Collateral mobility is a prerequisite to efficient global capital markets.
“By leveraging HQLAX's DLT platform, clients benefit from a seamless and efficient triparty solution across borders. This collaboration marks a significant step forward in Clearstream’s and Deutsche Börse Group’s commitment to providing trusted and efficient solutions for the markets.”
The initiative saw the firm design a new operating model which uses its platform to transfer securities collateral to (or between) multiple triparty agents, without triggering cross-custodian settlements.
“The industry has been trying to solve for triparty interoperability for over 20 years, and we are very excited that our feasibility study confirmed our platform as a scalable industry wide solution for collateral mobility across triparty agents and custodians,” says Guido Stroemer, HQLAX CEO. “The solution is here, now it’s up to the industry to implement it.”
HQLAX says the achievement marks a significant step forward in settlement speed and efficiency, and so banks will be able to take advantage of longer intraday settlement windows, and the ability to instruct transfers directly between triparty agents.
It was concluded with the help of a number of market participants banks (including HSBC, UBS, Standard Chartered), triparty agents (including J.P. Morgan, Clearstream), and service providers (including Transcend, Pirum).
These groups all joined HQLAX and Deutsche Börse Group in formulating the target operating model.
According to HQLAX, adopting this model will increase the speed and precision of collateral management activities, while reducing operating costs and risks for participants.
This new model allows banks to fulfil collateral obligations in triparty without needing to deliver securities out of their home custodian’s accounts, the firm adds.
The group created a “legally secure and deliverable design” and will now validate the business case in more detail with the intention to mobilise resources in 2025.
Commenting on the news, Bimal Kadikar, Transcend CEO, adds: “Clients need the ability to effectively deploy assets across venues to increase liquidity value and lower costs. The technologies are now available to meet this challenge and industry providers have the opportunity to adapt and meet these client demands.”
Todd Crowther, head of collateral services at Pirum, comments: “Pirum is delighted to be involved in the HQLAX working group, which reinforces our commitment to supporting clients with connectivity to the wider ecosystem of current and future technology solutions.
“This collaboration is a key pillar of our CollateralConnect vision of utilising digital platforms to drive further efficiencies in collateral management.”
Marton Szigeti, head of Collateral, Lending and Liquidity Solutions at Clearstream, explains: “Collateral mobility is a prerequisite to efficient global capital markets.
“By leveraging HQLAX's DLT platform, clients benefit from a seamless and efficient triparty solution across borders. This collaboration marks a significant step forward in Clearstream’s and Deutsche Börse Group’s commitment to providing trusted and efficient solutions for the markets.”
NO FEE, NO RISK
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
