- BNY acts as first agent lender for Cboe Clear Europe’s SFT Service, in addition to role as triparty collateral agent
- Service extends to UCITS clients, utilizing innovative collateral model
- Expands access to SFT clearing service to key segment of securities lending market
Cboe Global Markets announced that Cboe Clear Europe, its pan-European clearing house, has reached a significant step in the development of its securities financing transactions (SFT) clearing service, with BNY acting as the service’s first agent lender and clearing SFTs on behalf of UCITS clients.
Cboe Clear Europe and BNY have partnered to launch a new title transfer model with a pledge-back feature specifically for UCITS clients. This structure enables UCITS — alongside other beneficial owner lenders, such as sovereign wealth funds, pension funds, and central banks — to access the benefits of centrally cleared SFTs without posting margin or contributing to the CCP’s default fund when acting as lenders.
As a result, UCITS become more attractive counterparties for borrowers using Cboe Clear Europe’s service, increasing the amounts of assets on loan, boosting market liquidity and supporting balance sheet efficiency for borrowers in the securities lending space.
Vikesh Patel, president at Cboe Clear Europe said in a statement: “This innovation within our SFT cleared offering reinforces our commitment to driving market innovation, transparency, and resilience in financial markets. By leveraging BNY’s expertise and Cboe Clear Europe’s clearing capabilities, we have created an innovative solution that is designed to enhance market confidence, optimize collateral efficiency, and empower UCITS participants to engage in securities finance with unparalleled levels of security and transparency.”
“Working with Cboe Clear Europe on this landmark solution underscores BNY’s commitment to driving innovation and client-centricity in the financing and collateral ecosystem,” said Laide Majiyagbe, global head of Liquidity, Financing and Collateral at BNY, in a statement. “As the world’s largest agent lender and the first to go live with a centrally cleared tri-party model supporting UCITS-compliant clearing, we are proud to deliver enhanced collateral efficiency and liquidity through our integrated Global Collateral Platform”.
This milestone builds on Cboe Clear Europe’s launch of its SFT clearing service in March, with BNY as triparty collateral agent, which is transforming the traditional bilateral process for SFTs in European equities and ETFs into a centrally cleared model. The service is also integrated with Pirum for trade instruction and lifecycle event processing.
From a capital perspective, the introduction of central clearing to SFTs offers potential substantial capital optimization opportunities including meaningful reductions in risk weighted assets (RWA) for certain clearing participants. Additionally, Cboe Clear Europe is leveraging its position as the largest CCP for cash equities to offer cross-product margin offsets between cash equities and SFT trades, unlocking potentially powerful capital efficiencies.
With a highly scalable technology platform, Cboe Clear Europe is well-positioned to expand its SFT clearing service to cover other lendable securities and new jurisdictions in the next year.
Jan Treuren, senior director for Product at Cboe Clear Europe, said in a statement: “The ability for UCITS clients to use our SFT service is a significant development for both participants and the securities finance market as a whole. We look forward to welcoming more agent lenders and their UCITS clients to benefit from the increased utilization rates this innovative structure will bring. By combining operational automation, potential for capital efficiency, cross-product margining, and robust risk management, we are empowering participants and strengthening the securities lending market infrastructure for the future.”