BNP Paribas Securities Services, a leading global custodian with USD 9 trillion in assets under custody, is leading a series of initiatives to facilitate international financial institutions’ access to local fixed income markets.
Alain Pochet, global head of clearing, custody and settlement at BNP Paribas Securities Services, said:
“Financial institutions need fast and efficient access to local fixed income markets to satisfy their need for high quality collateral. In addition, regulations are pushing investors to hold sovereign debt and corporate bonds. All this comes at a time when the markets are concerned with a possible shortage of government and corporate bonds.
“As a global custodian and asset servicer, we see it as our role to help our clients secure the collateral they need and enable them to fulfil their investment strategies. That is why we are participating in a number of initiatives to give our clients direct access to local fixed income markets around the world.”
Initiatives BNP Paribas Securities Services is leading or participating in:
China Interbank Bond Market
Announced in February, the liberalisation of China’s domestic bond market, the third largest in the world, creates a new route for international investors to access onshore bonds.
Under the CIBM scheme, foreign institutions, including asset managers and securities companies, can trade bonds directly through banks holding a type A licence, such as BNP Paribas (China) ltd.
In this role, BNP Paribas Securities Services fully manages the administrative process required to gain access to the CIBM scheme, ensuring a seamless process from trade execution to settlement and custody.
BNP Paribas Securities Services has become a direct securities participant to the Federal Reserve through FedLine, the Federal Reserve’s online financial services information and payment service.
This facilitates its clients’ set-up and growth in the local fixed income securities market. BNP Paribas Securities Services’ clients now benefit from improved settlement turnaround and reporting, as well as first-hand pre-qualified information on income events. Direct connectivity also facilitates and protects clients’ securities margin and collateral movements.
BNP Paribas Securities Services is continually extending its European clearing capabilities to provide its clients with third party services for the repo clearing of bonds. The bank already provides this type of services for French, Spanish and Italian bonds and is working with central clearing counterparties in other countries to extend this offering.
In addition, the bank announced in January that it became the first Global Clearing Member (on behalf of Banque de France) in LCH’s new offering designed to help participants trading Euro Fixed Income repos through €GCPlus.
The bank’s Collateral Gateways solution for banks and brokers, launched in 2014, allows clients to automate the rebalancing of their collateral between their domestic accounts with BNP Paribas Securities Services and ICSDs for triparty needs, reducing potential settlement issues and operational risks.
The bank also upgraded its service in line with the newest TARGET2-Securities (T2S) requirements so that clients do not have to take on these adaptations themselves. For instance, it has enhanced its service to help clients benefit from T2S’ auto-collateralisation functionalities and the bank’s Collateral Gateways services independently.
T2S settlement in central bank money
BNP Paribas Securities Services gives clients the option to settle their trades using their dedicated cash account in T2S. This gives clients all the advantages of settling in central bank money while getting easy access to auto-collateralisation if necessary, leveraging their fixed income portfolios.