08.29.2011
By Terry Flanagan

ASX Teams With Clearstream

Australia will become the second market to use Clearstream’s collateral management service.

The Australian Securities Exchange has entered into discussions with Clearstream to develop a new collateral management service for the Australian market.

“The complete industry is under immense pressure in terms of preparing for upcoming regulation, so you need to come up with solutions to help better utilize the limited collateral to better cope with upcoming regulation” said Stefan Lepp, Clearstream board member and head of its global securities financing division. “Regulators are supportive because this is good for the Australian market.”

Clearstream Banking is the clearing and settlement division of Deutsche Borse, and is based in Luxembourg. The company was founded in 2000 through the merger of Cedel International and Deutsche Borse Clearing. Its international central securities depository operations are based in Luxembourg. It also acts as the central securities depository for Germany.

The company is in the process of forming collateral management agreements with several markets around the world. Its first partnership, which went live on July 18, was with Brazilian central securities depository Cetip on July 18. As part of the agreement, Cetip essentially outsourced its collateral management obligations to Clearstream. The company asserts that it is the only collateral management services provider in a position to manage collateral across time zones and regions while the assets stay in the respective domestic market, under local legislation, which is a regulatory requirement in many countries.

“The feedback (in Brazil) has been extremely positive,” said Lepp. “They understood that this is a functionality that will not weaken the market, everything stays in the Brazilian markets and under Brazilian regulation.

“Brazil triggered significant wave of interest out there in the market,” said Lepp, who indicated that an announcement regarding a third market to utilize the Clearstream collateral management infrastructure will come in the near future. “We’re engaged with a significant number of different markets, right now in many of the markets, we’re in the negotiation and fact finding process.”

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