Clearstream has signed a letter of intent with Strate, the South African central securities depository that could see domestic collateral management services outsourced to the Deutsche Bourse unit.
Under the LOI, Strate will look to tap Clearstream's collateral management infrastructure, the Global Liquidity Hub, for the allocation, optimisation and substitution of local collateral.
The system operates on a fully automated basis in real time and could enable Strate clients to handle their domestic collateral holdings and exposures more efficiently without the need to move out of the domestic South African environment, says Clearstream.
Monica Singer, CEO, Strate, says: "Strate continues to explore ways to ensure that South Africa is fully integrated into the global financial markets. We are always looking for ways to introduce efficiencies for our clients, while at the same time reducing their risk."
The South Africa project comes after similar recent Clearstream deals with Cetip, the Brazilian CSD, and the Australian Securities Exchange on collateral management plans.
Jeffrey Tessler, CEO Clearstream, says: "The ongoing financial crisis and regulatory initiatives like EMIR or reforms like Basel III require market participants to improve their liquidity management. Companies need to more efficiently handle their collateral holdings and exposure, and our outsourcing service addresses this industry concern."