Equilend connection to Eurex Clearing’s Lending CCP live

Rick Steves

EquiLend, the securities lending platform owned by a notable consortium of BlackRock, GoldmanSachs, Credit Suisse, JP Morgan Chase, BofA Merrill Lynch, Morgan Stanley, Northern Trust, State Street and UBS, is now establishing a live connection to Eurex Clearing’s central counterparty (CCP) service for the securities lending market, covering instruments such as stock loans and ETFs […]

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EquiLend, the securities lending platform owned by a notable consortium of BlackRock, GoldmanSachs, Credit Suisse, JP Morgan Chase, BofA Merrill Lynch, Morgan Stanley, Northern Trust, State Street and UBS, is now establishing a live connection to Eurex Clearing’s central counterparty (CCP) service for the securities lending market, covering instruments such as stock loans and ETFs in Europe as well as fixed income securities. EquiLend has over 80 clients to whom provide direct access to the Lending CCP service.

“We are pleased that our participants from buy and sell-side will be utilizing our connectivity to Eurex Clearing’s Lending CCP as an additional tool in their trading activity” said Brian Lamb, chief executive of EquiLend, in a statement.

“Driven by the need for further capital and cost efficiencies as well as the overall market environment, the securities finance industry realises more and more the benefits of a central counterparty clearing model”, he concluded.

Central clearing came into fashion amid increases in capital costs, turning borrowers and lenders more focused on counterparty exposure and its impact on the balance sheet. Firms look for CCPs for risk mitigation, effective use of capital, increased utilization and operational efficiency.

The announcement of a deal was made in September 2015, expecting the connection to be live in March. At the time, Matthias Graulich, Chief Client Officer of Eurex Clearing, said: “We are very pleased to work with EquiLend in our effort to bring the efficiency of Eurex Clearing’s Lending CCP to the securities lending market. Leveraging EquiLend’s existing market position and given the broad utilisation by its members will further enhance the attractiveness of our Lending CCP and be mutually beneficial to our clients and other connected markets.”

Eurex is owned by Deutsche Börse and was the first to offer clearing licenses to both buy-side and sell-side securities lending participants in Europe, the US and other countries. The US CCP model for securities lending by the OCC remains sell-side only, but increased volumes have been seen over the year.

Eurex Clearing was finally approved by the CFTC as a registered Derivatives Clearing Organization (DCO) in February 1, 2016. The firm was already registered by the same authority in 2009 as a Multilateral Clearing Organization (MCO), enabling the company to offer its existing OTC facilities to the 75 Eurex members based in the U.S. On April 2014, the Germany’s financial regulator BaFin authorized Eurex Clearing to act as a central counterparty clearing (CCP) under the EMIR rules.

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