The securities lending business turns gradually into a centrally cleared segment. “The impact of regulation and the increasing cost of capital, combined with the drive for operational efficiency, support central clearing for the securities lending marketplace”, said Erik Müller, who will take over responsibility for Eurex Clearing on 1 July.
The development and implementation of a centrally cleared securities lending solution is part of Deutsche Börse Group’s strategy to incorporate new and innovative offerings that assist members to increase capital efficiencies by maintaining and supporting the bilateral, relationship driven characteristics of the securities lending market.
Eurex Clearing, along with leading firms from the securities financing markets, has embraced change and innovation to make the Lending CCP a fundamental part of its day-to-day business. Morgan Stanley partnered with Eurex Clearing in late 2014 to enhance and expand the original securities lending clearing offering, and has been actively using the Lending CCP since April 2016.
“Morgan Stanley and Eurex Clearing combined efforts to identify the remaining barriers to broader take-up of central clearing securities lending transactions. This has been a key strategic development in creating a centrally cleared model that is resource-efficient for all participants and allows us to create additional capacity for our clients,” said Susan O’Flynn, Global Head of CCP Strategy, Governance and Optimization at Morgan Stanley. “Following extensive collaboration with our clients, we are now actively trading in a new centrally cleared model that is much closer to bilateral market execution, particularly in post-trade activity.”