With Euroclear Bank's recent move to expand its operational capabilities in Hong Kong and the growing appetite for cross-border securities financing using Asian securities as collateral, Euroclear Bank is easing liquidity challenges in the global capital markets.

It is now operationally possible, and increasingly appealing, for clients to use Asian 'safe-haven' securities, such as Japanese government bonds, as collateral to meet their overnight financing needs. Asian clients are now able to use Euroclear Bank's triparty services to close overnight repo transactions with European counterparties at the end of their business day, thereby leveraging their end-of-day securities positions as collateral, and have full use of these securities the next morning. European-based firms, in turn, are now able to finance their yen and other Asian currency exposures with local Asian securities and counterparties. These clients use Euroclear Bank's triparty collateral management service to move securities and/or cash automatically between the relevant accounts, and to automatically substitute securities that are used in financing deals when needed to fulfill other transaction settlement needs.

Because Euroclear Bank processes transactions in real-time during the day and in batch overnight (European time), clients in both continents have access to their securities and cash during their respective business days. And, with Euroclear Bank's new operations centre in Hong Kong, staff are available in local Asian time zones to manage relationships with Asian depositories, agents and clients, should the need arise.

Raj Patel, Executive Director with Morgan Stanley Tokyo, said: "By expanding our use of Euroclear Bank's triparty collateral management services to manage our repo transactions that are collateralised with Japanese government bonds, we are increasing our financing capabilities and optimising the use of our securities positions. Euroclear Bank's capability adds efficiency and liquidity to facilitate overnight financing between European and Asian counterparties."

Japanese government bonds can, in fact, be used to support any collateralised transaction administered by Euroclear Bank as part of its triparty collateral management services, including securities lending transactions.

Richard Childs, Head of European Agent Lending, from Mizuho International in London, said: "We are very pleased to accept Japanese government bonds in our triparty arrangements as it widens the pool from which our borrowers can pledge more securities to cover borrowing exposures, thereby expanding critical liquidity resources."

Commenting further, Olivier Grimonpont, Director and head of Collateral Services at Euroclear Bank, said: "The subprime crisis has underscored the need for greater collateral efficiency to meet liquidity requirements. We are working to expand our service to help clients extend their reach to more pools of collateral."