Clearstream taps Target2 liquidity for overnight collateral service

Clearstream taps Target2 liquidity for overnight collateral service

Securities depository Clearstream has launched a euro night-time funding link (ENTFL) for customers to access liquidity held in Target2 accounts and make it available for the settlement of euro transactions during night-time processing.

Target2, the EU-wide real-time gross settlement (RTGS) system for large value payments, was launched earlier this week. All Eurosystem central banks will migrate to it over the next year as it replaces the national decentralised platforms operating under Target.

The new Clearstream facility runs when Target2 is closed for payments at night and provides a means to bring in collateral against credit set aside for euro settlement.

Clearstream says the facility offers a clean starting position before Target2 opening, easy and full control over the liquidity dedicated to the service and reduction or replacement of the need to pre-advise Clearstream of euro payments ahead of night-time processing.

Michael Jaeggi, member of the executive board, Clearstream Banking, says: "Customers manage this service using the same tool as for their Target2 account, making this service efficient and easy to use and implement."

Joachim von Eiberg, director, transaction banking markets, Commerzbank, adds: "Clearstream's early use of Target2 features to provide this liquidity management service is a further step to improve the efficiency of liquidity provisioning for the settlement of securities transactions, which is in the interests of all market participants."

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