Central counterparty (CCP) the Indian Clearing Corporation Limited (ICCL) has joined Clearstream’s integrated collateral management engine, the Global Liquidity Hub.
The partnership intends to allow clearing members and custodians to manage the margin requirements resulting from trades on the Bombay Stock Exchange (BSE) platform.
Collateral belonging to Clearstream and partner banks will be pooled at the Global Liquidity Hub in a bid to avoid bottlenecks in sourcing high-grade collateral to meet the CCP’s margin requirements.
It means foreign investors trading on the BSE platform will be able to deposit AAA-rated foreign sovereign bonds to ICCL as collateral, all within an automated and efficient triparty environment.
The partnership is based on guidelines issued by local regulators the Reserve Bank of India and the Securities and Exchange Board of India.
It follows the objective of strengthening the stability of Indian capital markets through using high-quality collateral for risk management, while also allowing access for foreign investors, therefore making India globally competitive.
Stefan Lepp, head of global securities financing and a member of the executive board at Clearstream, said: "This new partnership is part of our strategy of enabling customers to use the Global Liquidity Hub as a single source of liquidity to collateralise multiple global exposures in a streamlined and optimised manner."
K. Kumar, managing director and CEO of Indian Clearing Corporation Limited, added: "ICCL is committed to providing enhanced clearing, collateral management and risk management services to help members comply with new regulatory requirements and to bring Indian trading practices in line with the best in the world.”
The collaboration is part of a winder partnership between BSE and Deutsche Börse. Clearstream is also in discussions with Indian market regulators and BSE over introducing models for government and corporate bonds intended to make access to the Indian market easier for international investors.
