Canada’s CDS and Euroclear aim to develop collateral management service for Canada

CDS Clearing and Depository Services Inc. (CDS), Canada’s equities and fixed income clearing house, and the Canadian Derivatives Clearing Corporation (CDCC), each wholly-owned subsidiaries of TMX Group Limited, today announced a joint initiative with Euroclear to develop a new collateral management service for Canada’s capital markets.

Under the terms of a Memorandum of Understanding (MOU), CDS, CDCC and Euroclear are working together to develop an automated collateral management service for the domestic Canadian market. The service will be designed to improve interoperability between existing domestic collateral pools and consequently result in increased liquidity and efficient collateral mobility. This service will also align the Canadian market to global collateral management standards and provide the foundation for future international collateral mobility.

“We are excited to be working with Euroclear to deliver a solution aimed at enhancing collateral mobility and liquidity in Canada, placing our post-trade infrastructure on par with the most advanced markets in the world,” said Jay Rajarathinam, President of CDCC and CDS and Chief Technology and Operations Officer for TMX Group. “This initiative, powered by CDS’s Post-Trade Modernization Program, represents a significant step forward in our ongoing efforts to keep pace with the ever-evolving collateral requirements of our capital markets.”

The utilisation of CDS’s Post-Trade Modernization settlement platform and Euroclear’s Collateral Highway will enable market participants to mobilize collateral assets —held at CDS— across their various accounts, including repo, securities lending, cleared and uncleared margin accounts.

“We are delighted to be working with TMX Group on the delivery of a service, utilising our GlobalCollateral business, that will support the collateral landscape within Canada,” said Jo Van de Velde, Managing Director, head of Group Strategy and Product Expansion, Euroclear. Building on our strong history in the Canadian market, where we have provided international services for many years, we will now provide the functionalities to connect our Collateral Highway to the Canadian market, improving interoperability between collateral pools.”

The service —targeted for launch in the second half of 2022, pending regulatory approvals—will complement and connect existing service providers in the collateral ecosystem and facilitate the funding of Canadian market activity using assets domiciled in Canada.

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