An open highway to triparty Euroclear Collateral Conference May 2015.

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Presentation transcript:

An open highway to triparty Euroclear Collateral Conference May 2015

Risk management of treasury investments Three key principles Capital preservation ► Avoid direct banking exposure Maximisation of liquidity options … at a reasonable yield 2 Yield CreditLiquidity Reverse repo is your investment option

A market driven by new regulations ‘Repo and securities lending are set to play an absolutely central role in the post-reform landscape’* Andrew Hauser, Head of Sterling Markets Division, Bank of England, and Chair of the Securities Lending and Repo Committee 3 Increasing demand for high quality collateral and term lending Basel III (LCR & NSFR), Dodd-Frank / EMIR, UCITS / Shadow Banking, CSDR * Extract from a speech at JP Morgan’s Collateral Management and Securities Financing Forum 27 th of March 2014, London

Euroclear The fast road to repo 4 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 During the lifecycle of a repo Securities Cash € 200m Collateral providerCash provider External use

Smoothing the bumps in the road Market and operational risk Triparty collateral management services Legal risks Counterparty risk Thorough selection of counterparties Collateralising exposures Market standard legal agreements (e.g. GMRA or GMSLA) Clear definition of eligible collateral Diversification through concentration limits Over-collateralisation through margins Settlement risk Collateral monitoring Corporate events processing Operational risks Market risk on collateral

Triparty collateral management A neutral collateral agent Collateral GiverCollateral Taker Exposure Collateral Collateral profile Reporting Custody Valuation Settlement Selection Matching 6

Smoothing the bumps in the road Market and liquidity risks Collateral Taker can: Exclude certain risks Limit certain risks/ diversify across types Over-collateralise Time to maturity Instrument type Rating Issuer type Country Quotation age Eligibility Set Eligible security Concentration limits Margin percentage Equities Fixed income Quotation age Indices Sector Capitalisation Traded volume 7

Triparty collateral management One platform, multiple products Cash Collateral Loan (1) Collateral (1) Optional Seller Repo CCP GC products Collateral giver BorrowerPurchaserLender OTC Derivatives CCP margining Collateral taker Securities lending BorrowerCentral Bank Central Bank credit operations

Questions What do you look for in a triparty partner? How can we support you when maximising your triparty relationships in order to meet your collateral needs?