Euroclear Bank and CME Clearing Europe have signed an agreement to help mutual clients fulfil their collateral obligations to meet initial margin requirements.
Euroclear Bank will source and manage securities collateral for this purpose on behalf of clients from its 'Collateral Highway'. The arrangement is intended to address the necessity of managing securities collateral effectively to cover exposures arising from the growing involvement of central counterparties (CCPs) in more types of transactions. Using Euroclear Bank's triparty collateral management experience to meet the risk management needs of CME Clearing Europe aims to bolster the stability and solidity of the CCP while enabling its members to focus on their trading strategies.
Andrew Lamb, Chief Executive Officer, CME Clearing Europe said: "Triparty collateral management services bring additional flexibility to the markets we serve and offer greater certainty in a default management scenario. By working closely with our members, and with a range of proven infrastructure service providers like Euroclear Bank, we are strengthening our offering to market participants."
Saheed Awan, global head of collateral management services at Euroclear Bank, said: "Central counterparty clearing institutions like CME Clearing Europe are playing a vital role in mitigating credit risk, expanding their role further with new regulatory requirements for OTC derivatives transactions. Indeed, we are very committed to these key infrastructure institutions. We have made our Collateral Highway available to them so that their clearing members, who are also our clients, are able to deliver collateral for CCP margin calls with ease and efficiency through our triparty collateral management service."