Clearstream and Standard Chartered Bank are to cooperate on developing a customised collateral management solution for their mutual clients.
The two companies have signed a letter of intent that has signalled the start of their development collaboration to enable customers of both Clearstream and Standard Chartered to benefit from the Liquidity Hub Connect collateral management service.
This will allow Standard Chartered customers to be able to consolidate their collateral holdings through Clearstream's Global Liquidity Hub and cover their global exposures from a single collateral pool. The customers will therefore be able to leave their assets in custody at Standard Chartered while avoiding any inefficient collateral fragmentation.
The cooperation agreement was welcomed by George Nast, Global Product Head, Transaction Banking at Standard Chartered Bank, who said: "I am pleased that the joint clients of Standard Chartered and Clearstream will be able to cover their global exposures from a single collateral pool. Not only will clients across our footprint markets of Asia, Africa and the Middle East be able to effectively collateralise obligations on a real time basis, they can overcome an industry challenge of collateral fragmentation as well."
Stefan Lepp, Member of the Executive Board and Head of Global Securities Financing at Clearstream, was delighted to strengthen ties with Standard Chartered as a strategic partner. "We have been working with Standard Chartered for some time now and are pleased to be able to reinforce our relationship through developing the Liquidity Hub Connect service," he said.
"Clearstream's working philosophy of creating cooperation agreements with strategic partners is having a big impact in extending reach and scope for our mutual customers and their clients. This will be the third customised Liquidity Hub Connect service to be developed and we are pleased to say that it delivers the most efficient solution on the market as it only mobilises collateral based on actual demand."
Liquidity Hub Connect aims to help financial institutions to address the challenges they face in mobilising collateral in order to satisfy new market regulations. Optimising collateral ensures institutions can reduce financing costs and avoid maintaining excessive collateral buffers.