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Cboe Clear Europe has received additional support from a leading company to launch central counterparty (CCP) clearing services for securities financing transactions (SFTs).
Vikesh Patel
With the addition of Bank of America and State Street, the total number of launch participants now stands at nine, including banks, clearing companies, asset managers, and custodians.
Vikesh Patel, President of Cboe Clear Europe, said: “We are pleased to have added two leading participants in the European securities lending industry to the group of companies supporting the launch of the SFT service, and we look forward to working with them as we finalize the service. We can benefit from our collective expertise.” ”
Participants include borrowers such as ABN AMRO Clearing Bank, Bank of America, Barclays, Citibank, Goldman Sachs, and JP Morgan, as well as agent lenders such as BNY Mellon, Citibank, and State Street.
Mr Patel said: “Their recent efforts, and the caliber of the early adopter group we have assembled, demonstrate the need to bring central clearing to the European SFT market and help reduce risk in this important activity. “This clearly shows that it is increasing.”
Based in Amsterdam, CCP aims to bring matching, CCP clearing, settlement and post-trade lifecycle management to SFT trading of European cash stocks and ETFs.
Alessandro Cozzani, Managing Director, Bank of America, said: The development of clearing products for securities lending is a natural evolution in our secured lending market and should further enhance risk optimization with our counterparties. ”
Pending regulatory approval, the service will be available to principal lenders, special participating lenders (UCITS and non-UCITS) and borrowers, with settlement taking place at 19 European Central Securities Depositories (CSDs).
By providing CCP clearing and settlement services for SFTs, Cboe Clear Europe helps clients navigate new regulations, reduce risk-weighted asset exposures associated with bilateral SFTs, and drive market growth. We aim to promote this.
The service also aims to increase operational efficiency, reduce failure penalties, eliminate agency lender disclosures, and improve practices around fee management, corporate activities, and post-transaction lifecycle processing.
said Jan Treulen, SFT Product Lead at Cboe Clear Europe. “We are working closely with all launch participants to help shape the first phase of SFT service delivery through a series of regular working groups and key stakeholder meetings.” This includes considering expanding our services to other asset classes and jurisdictions. At launch, Cboe Clear Europe will be the only pan-European CCP offering these integrated services for European spot equities and ETF SFTs. ”
In Europe, attempts to successfully introduce and maintain SFT clearing have failed in the past, with a recent high-profile warning being conveyed through Eurex Clearing that the company will not be able to clear securities in 2021. announced that it would end its lending CCP service. This is because the payment volume is low and other businesses are prioritized.
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