Clearstream’s innovative master agreement enables repo with multiple counterparties via just one contract

  • First customers have already signed the repo master agreement which is applicable for any number of counterparties
  • Pioneering approach also paves the way towards new buy-side customer groups
  • Customers benefit by being able to build up relationships with counterparties before choosing to move to other bilateral repurchase agreements

A new legal master agreement for triparty repo transactions has been developed by Clearstream to enable market participants to sign just one contract for multiple counterparties and speed up counterparty “marriage broking”.

Clearstream Repurchase Conditions (CRC), a master agreement governed by Luxembourg law, effectively enables customers to be able to trade with their chosen counterparties within just a few days.

The CRC contains most of the core provisions of current industry standardised repo agreements. It will offer repo participants the possibility of effectively testing their commercial appetite with regard to numbers of trades and volumes with a counterparty before choosing to carry out the extra effort necessary to enter into other bilateral repurchase agreements.

Already, the CRC is proving to be of particular interest to new players in the repo market who are currently deterred by the existing lengthy contract negotiation process. The CRC is available to customers on both the buy and sell-sides and is expected to appeal to corporates entering into reverse repos to secure their financing and then re-use the collateral they receive to cover OTC derivative margin requirements with clearing members or CCPs.

The CRC is an innovative master agreement that is helping to attract new players into experiencing the security benefits of the triparty repo market, according to Stefan Lepp, Head of Global Securities Financing at Clearstream.

“We have seen clients give up on entering the repo market because they were waiting too long to negotiate bilateral agreements with each of their potential counterparties,” he said. “So we developed the CRC to deliver a pioneering, refined and simplified contract that offers a workable framework to satisfy the growing marked demand that goes hand-in-hand with new market segments entering the repo space.”

This initiative by Clearstream is the latest in a series of developments designed to facilitate easy and streamlined access to triparty repo.

Earlier this year, Clearstream announced strategic partnerships with the electronic trading platform 360T, serving a wide – mainly corporate – customer base, and with Bloomberg, automating the affirmation and processing of triparty repo transactions via Bloomberg terminals.

Triparty repo’s high level of security and efficiency make it a popular money market tool for many financial and non-financial institutions. Repo counterparties agree their transaction terms and can then use a repo triparty agent, such as Clearstream, which can carry out all the margin call arrangements such as automated allocation, substitution and optimisation.

Clearstream’s world-leading Global Liquidity Hub encompasses a pioneering, comprehensive and flexible suite of collateral management and securities lending products for both financial and non-financial institutions worldwide.

The Global Liquidity Hub was launched in 2009 and employs an open architecture enabling customers to gain maximised opportunities.

Clearstream customers have the benefit of automated collateral movements with central counterparties, such as Eurex Clearing, LCH.Clearnet Ltd and Oslo Clearing and can pledge collateral to selected central banks – the Bundesbank, Federal Reserve Bank of New York and the Banque centrale du Luxembourg.

The Global Liquidity Hub incorporates a collateral pool with almost EUR 600 billion outstanding (weekly average), a network of more than 500 active counterparties plus a number of dedicated workstreams: Liquidity Hub GO (Global Outsourcing), an outsourced collateral management service that supports domestic market infrastructures; Liquidity Hub Connect, a collateral management service for custodian banks; Liquidity Hub Collect, cooperation with a number of trading venues and electronic platforms; and Liquidity Hub Select, which offers products especially tailored for buyside customers.

About Clearstream

Clearstream is the post-trade services and global liquidity provider within Deutsche Börse Group. As an international central securities depository (ICSD) headquartered in Luxembourg, Clearstream provides the post-trade infrastructure for the Eurobond market and services for securities from 53 domestic markets worldwide. Clearstream’s customers comprise approximately 2,500 financial institutions in more than 110 countries. Its services include the issuance, settlement and custody of securities, as well as investment fund services and global securities financing. With around EUR 11.7 trillion in assets under custody, Clearstream is one of the world’s largest settlement and custody firms for domestic and international securities. As a central securities depository (CSD) based in Frankfurt, Clearstream also provides the post-trade infrastructure for the German securities industry.