As of 17 November 2014, customers can consolidate their holdings in Singaporean collateral through Clearstream and cover their global exposures from a single collateral pool
Collateral from Singapore and directly held at Standard Chartered Bank can now be automatically allocated to cover exposures with any counterparty in Clearstream in real-time and only up to the required amount
Customers will be able to leave their assets in custody at Standard Chartered to avoid inefficient collateral fragmentation
Only 18 months after starting development work, Clearstream and Standard Chartered Bank have now implemented a collateral management service for Singapore. From 17 November onwards, mutual customers will be able to consolidate their assets held across both institutions into one single pool to perform collateral management transactions with any Clearstream collateral receiver. The service is part of Clearstream’s integrated collateral management offering, the Global Liquidity Hub.
Assets held by a customer in an account with Standard Chartered in Singapore are now automatically moved to a Clearstream account at Standard Chartered when they are needed as collateral, thereby relieving customers of cumbersome manual collateral transfers and allocations. These automated procedures can be used to allocate collateral held in Singapore to cover global exposures with any counterparty in Clearstream.
The automated collateral allocation is performed in real-time and only up to the required amount. In addition, the system will also identify and allocate the ideal collateral, meaning the cheapest collateral option to match the underlying exposure requirements. When the assets are required for local settlement in Singapore or are no longer needed for triparty purposes, they are returned automatically to the customer’s settlement account at Standard Chartered.
George Nast, Global Product Head, Transaction Banking at Standard Chartered Bank, said: “I am pleased that mutual customers of Standard Chartered and Clearstream are now able to optimise their inventory held in custody with us in Singapore, by seamlessly and efficiently allocating it to cover their global exposures from a single collateral pool. This greatly streamlines collateral management for Singaporean assets and enables our customers to maximise the use of these assets, thereby overcoming one of the most pressing challenges faced by the industry today – collateral fragmentation.”
Stefan Lepp, Member of the Executive Board and Head of Global Securities Financing at Clearstream, was pleased about the quick time-to-market and smooth implementation of the service: “We are pleased to be able to reinforce our excellent relationship with Standard Chartered with this new service. We have received positive feedback from the market and customers have started to sign up already – we expect first transactions to take place in the week the service goes live on 17 November.”
This partnership with Standard Chartered Bank enables mutual customers of Standard Chartered and of Clearstream to benefit from the best of both worlds: Clearstream’s fully automated global collateral management, as well as extensive local custodian services by Standard Chartered. The collateral management service will initially be rolled out for Singapore with other Asian markets such as Hong Kong to follow.
The Global Liquidity Hub is Clearstream’s integrated liquidity and collateral management environment and the Liquidity Hub Connect service is Clearstream’s solution for agent banks. The service enables customers of agent banks to benefit from Clearstream’s collateral management services to use their assets held at the agent bank for triparty transactions in the Global Liquidity Hub. Customers benefit from the Global Liquidity Hub’s full suite of services, including collateral allocation, optimisation and substitution without having to move their assets.
In addition to the collaboration with Standard Chartered, Clearstream is also partnering with the Singapore Exchange (SGX) under the Liquidity Hub GO (Global Outsourcing) service which will bring a collateral management solution to the Singaporean market as a whole. Under this partnership, SGX will white-label Clearstream’s collateral management services to cover domestic exposures in Singapore.