Finance: Clearstream announced a deal with a US giant on Thursday, in the latest sign collateral management services are a big part of the Kirchberg firm’s international growth plans.
Clearstream partnered with New York-based Depository Trust & Clearing Corporation, another provider of specialised services to financial institutions. The agreement calls for Clearstream to launch new bilateral and syndicated loan services based on DTCC’s technology, and for the American firm to integrate Clearstream’s collateral management platform into its line-up.
Demand for collateral management systems has grown since--in the wake of the global financial crisis--liquidity and risk management requirements were boosted by governments around the world. Clearstream’s approach is the first that allows the function to be totally outsourced yet continue to operate and be regulated domestically, the company says.
In August, Clearstream and the Australian Stock Exchange (ASX) agreed to develop a collateral management service for the Australian market. It also will be based on Clearstream’s technology, which has been in use for 20 years in Europe, and the company’s all-in-one service that launched in Brazil in July.
The ASX estimates the pool of non-cash collateral is more than $2.4 trillion alone in the lucky country. Earlier this year, the consulting firm Accenture estimated the value of cash and securities used as collateral in the global financial system tops €12 trillion.
On Wednesday, Accenture and Clearstream released a study that reckons the financial industry could save more than €4 billion in collateral management expenses. The survey of 16 global banks “found that decentralized operations and unaligned business objectives are limiting banks’ ability to manage collateral efficiently.”
“Efficient collateral management can free up liquidity for banks, enabling them to offer a greater range of products and services and more readily meet these new regulatory requirements,” the companies wrote.