Download - Triparty for corporates Break-out session Euroclear Collateral Conference Tuesday, 13 May 2014
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Triparty for corporates
Break-out session Euroclear Collateral Conference
Tuesday, 13 May 2014
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The repo market is the ideal meeting place for lenders and borrowers looking for secured term investments
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Moving from unsecured to secured investmentIntroducing Repo
Post-crisis, a treasurer’s three objectives:
• Investing in line with term liabilities
• Securing his investment
• Obtaining a reasonable return
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Securities
Cash
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Collateral provider
Cash provider
Moving from unsecured to secured investmentPrinciples of Repo
Securities
€ 200m
CashOpening
Collateral provider
Cash provider€ 200m + interest
Closing
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Moving from unsecured to secured investmentRepo – what value does it bring ?
Post crisis3-month liability invested in a 1-week asset
Libor: the unsecured curve
opportunity gain
Spread between unsecured & secured curve
You can invest
longer term in a secured
way!!
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Moving from unsecured to secured investmentHigher returns for secured financing
EUR rate for Investment grade collateral (BBB and above)
unsecured Euribor rate
average rates Euroclear Bank triparty repo
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Triparty collateral managementBenefits for the Corporate
• The benefits of Repo
• Minimal operational effort through a triparty agent► Complete outsourcing of collateral management tasks► No fees for cash providers
The best of both worlds
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Euroclear
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Securities
Cash
• Transfer of eligible securities against cash in a secured way
• Valuation of securities on daily basis to make sure always equal to 200m cash
• Margin calls and releases according to valuation
Triparty Collateral managementThe repo outsourcing solution
€ 200m
During the lifecycle of a repo
Collateral provider
Cash provider
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Triparty Collateral managementThe repo outsourcing solution
Automatic processes
Integrated systems protect youagainst settlement and custody risk
• Matching of trade details• Selection according to eligibility• Transfer of securities • Daily mark-to-market• Margin calls and releases• Asset servicing of collateral
Dedicated support
Operational teams guide you in your day-to-day operational needs
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• Euroclear has a light footprint:
► Instructions can be sent via Bloomberg, Fax or Swift Lite
► Web-based and e-mail reporting of collateral received, at flexible frequencies
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Triparty Collateral managementCommunication means
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Triparty Collateral managementEntering the repo market
Cash Borrower
Corporatetreasurer
Repurchase ServiceAgreement
Bilateral repo agreement
e.g. GMRAEnables trading repo
Outsources collateral management to Euroclear Bank
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Repo is still a challenge for many treasurers
Triparty Collateral managementAdmission and legal effort
• Euroclear Bank has simplified its admission and registration process to ensure smooth onboarding
• But negotiating and signing a bilateral GMRAs remains a time-consuming and costly exercise…
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Introducing RepoAccess A new service for Corporates
• Euroclear’s answer to the challenge posed by the GMRA is RepoAccess, a free service available to Collateral Takers
• Through RepoAccess, Euroclear Bank leverages its existing GMRAs with all major Collateral Givers to set-up new relationships between the Giver and RepoAccess clients
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• Euroclear will establish a new GMRA, based on its existing GMRA, in the treasurer’s name
• A treasurer can have the benefits of repo while being shielded from negotiating a GMRA
Euroclear Bank RepoAccess Principles
Euroclear obtains a mandate to set-up a GMRA
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Euroclear Bank RepoAccess Legal framework
Cash Borrower
Corporatetreasurer
Repurchase ServiceAgreement
Bilateral repo agreement
(GMRA)
Agency agreemen
t
The Agency agreement enables Euroclear to handle the set-up of the GMRA
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With RepoAccess, have
• The benefits of industry-standard agreements (vs proprietary alternatives)
• Flexibility over post-trade settlement (bilateral, other triparty agents)
• Full control of the collateral profile and of trade execution
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Euroclear Bank RepoAccess Advantages
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Interested in joining the Collateral Highway?
Contact your relationship manager or one of our specialists
Olivier de [email protected]+32 (0)2 326 2884
Simon [email protected]+32 (0)2 326 1626
Triparty Collateral ManagementGetting started
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