Eurex Clearing, Europe’s leading clearing house and part of Deutsche Börse Group, announced that Morgan Stanley, one of the leading global investment banks, will become a clearing member of the Securities Lending CCP. Both partners aim to have finalized the process by the end of October.
“Morgan Stanley is supportive of CCP solutions for securities lending such as the Eurex Clearing model as it allows us to preserve our client relationships and deliver best execution with risk, resource and operational efficiencies. Tiered membership plays a critical part in facilitating buy-side participation through different forms such as the Specific Lender License,” said Susan O’Flynn, Managing Director, Global Head of CCP Strategy and Optimization, Morgan Stanley.
Tom Wipf, Managing Director and Global Head of Bank Resource Management, Morgan Stanley, continued: “Central clearing solutions for securities financing transactions are an important market development. We believe that this partnership with Eurex Clearing is a major step forward in providing these important risk management alternatives to our clients. We have been working closely with Eurex Clearing to expand and enhance this service to ensure the final product will result in a robust platform that supports greater liquidity for our clients in the securities financing markets.”
“We are very pleased that Morgan Stanley as a global leader and pioneer in financial markets has decided to use our Lending CCP. This confirms the strong value proposition of our clearing service for bilaterally agreed securities lending transactions. We are looking forward to further develop our relationship and enhance our service offering in close cooperation with major market participants,” said Matthias Graulich, Chief Client Officer and member of the Eurex Clearing Executive Board.
Eurex Clearing’s Securities Lending CCP was launched in November 2012. It brings the benefits of central clearing to a significant and so far largely bilateral market segment. The current product scope includes equities from Belgium, France, Germany, the Netherlands and Switzerland as well as a wide range of international fixed-income instruments and exchange-traded funds. The clearing service reduces counterparty risk and provides significant cost benefits to market participants with increasing capital requirements for bilateral exposures. Four clearing members have already been admitted to the service and have cleared first transactions. Further market participants are in the admission and on-boarding process.
A unique feature of Eurex Clearing’s Securities Lending CCP is a Specific Lender License that benefits both Agent Lenders and their Beneficial Owners. This ensures greater participation by the buy-side by offering tiered membership, thus increasing the liquidity available to clients. With this set-up, it preserves the special structure of the securities lending market and offers the capital efficiency and safety associated with central clearing.
The Securities Lending CCP service is based on Eurex Clearing’s established systems and industry leading risk management standards. Securities lending transactions from Eurex Repo’s SecLend Market or via Pirum’s CCP Gateway can be cleared by Eurex Clearing. The service is integrated with two tri-party collateral agents, Clearstream Banking Luxembourg and Euroclear Bank.