Counterparty risks in securities lending market will be mitigated significantly
Eurex Clearing AG and Clearstream Banking Luxembourg S.A. today announced that they will introduce a central counterparty service (CCP) for securities lending* in Q2 2009. Eurex Clearing will act as the clearinghouse for Clearstream’s widely used strategic securities lending program ASLplus. The central clearing service will be based on Eurex Clearing’s proven systems and industry leading risk management standards. Securities lending customers will benefit from netting on an anonymous basis, balance sheet relief and mitigation of counterparty risk. The initiative will create a European market standard for clearing securities lending transactions via a central counterparty.
Thomas Book, member of the Eurex Executive Board responsible for clearing, said, “The introduction of a central counterparty for securities lending transactions will deliver significant efficiencies to lenders and borrowers. Against the backdrop of the financial market crisis, central clearing services have become even more important to help stabilize markets, mitigate counterparty risk and increase market efficiency.”
Stefan Lepp, member of the Clearstream Board and Head of Global Securities Financing, added, “With the introduction of a central counterparty for securities lending, we expect the impact to be as positive on the market as the introduction of a central counterparty for our GC Pooling market. The CCP will help restore confidence in the lending industry and lead to a new quality of liquidity. This joint offering once again emphasizes the advantages of Deutsche Börse Group’s integrated business model – we can offer a complete service package from a single source.”
The new offering is initially designed to complement Clearstream Banking Luxembourg’s successful ASLplus securities lending program, launched in December 2005. In addition, the new central counterparty will realize various synergies within Deutsche Börse Group, such as a link up to Eurex SecLend, the electronic market for securities lending, or to Clearstream’s securities lending services in Luxembourg and in Frankfurt.