The German Finance Agency (Bundesrepublik Deutschland Finanzagentur), has confirmed plans to use Clearstream as the exclusive channel for providing liquidity in the high-traded national government debt securities marketplace.
The Agency's bund holdings will be distributed via Clearstream's Automated Securities Lending and Borrowing (ASL) programme where securities are provided to borrowers when a fail has been identified during the settlement process.
The potential daily injection of liquidity will be a significant boost for Clearstream as it fends off competition from rival depository Euroclear. German government bonds are the most internationally traded debt securities. The exclusive distribution deal is expected to improve settlement and provide an additional source of income for the German finance agency.
Saheed Awan, executive director global securities financing services at Clearstream Banking states: "Clearstream, Deutsche Bundesbank and the Finance Agency together have devised this solution which is good for the whole market and provides an even more robust marketplace for German Government securities."