Dubai Commodities Clearing Corporation And Clearstream Cooperate In Collateral Management

08/10/2013

  • First Middle Eastern central counterparty (CCP) to link to the Global Liquidity Hub of Clearstream
  • Cooperation to go live in Q1 2014
  • Clearstream continues to develop open architecture for global liquidity management to avoid new systemic risk

Clearstream and the Dubai Commodities Clearing Corporation (DCCC), the central counterparty (CCP) of the Dubai Gold & Commodities Exchange (DGCX), have agreed to cooperate on collateral management for CCP margining. The Middle Eastern CCP will join Clearstream’s extensive central counterparty network by connecting to the company’s integrated collateral management environment, the Global Liquidity Hub.

By the end of the first quarter of 2014, DGCX customers will be able to leverage the collateral pools of Clearstream and its global strategic partners to meet margin requirements at DCCC through the Global Liquidity Hub. Thanks to its open architecture, the Global Liquidity Hub enables market participants to manage their growing number of worldwide exposures on a fully automated basis out of a single, global collateral pool which consolidates assets held at Clearstream and its strategic partners.

DCCC now joins the long list of central counterparties that are already connected to Clearstream’s liquidity management solution benefitting from Clearstream’s already announced partner CSDs and agent bank partners such as ASX (Australia), CDS (Canada), Cetip (Brasil), Iberclear (Spain), SGX (Singapore), Strate (South Africa), BNP Paribas, Citibank and Standard Chartered. In total, the Global Liquidity Hub already includes over 550 counterparties.

Gary Anderson, CEO of Dubai Gold and Commodities Exchange (DGCX), said: “We are happy to form an alliance with leading global post-trading services provider Clearstream to support our members in seamlessly and efficiently accessing global liquidity pools. Partnerships like these are key building blocks in our efforts to transform the Middle East’s derivatives marketplace and become a key hub in the global liquidity infrastructure map. Demand for collateral is expected to grow significantly, driven by both market forces and regulatory reform, and DGCX is keen to support its members in deploying collateral optimally without fragmentation.”

Gaurang Desai, Chief Operating Officer of DCCC, said: “The partnership with Clearstream strengthens our overall offering for DGCX members with a service that promotes significant efficiency gains in managing and transferring collateral. This alliance takes our strategic efforts of being the CCP of choice in the region a notch further by providing products and services of international standards to our customers. The Clearstream alliance allows us to help our Members not only in addressing key liquidity requirements but also in creating new value and revenue opportunities through improved collateral management.”

Stefan Lepp, Head of Global Securities Financing and Member of the Executive Board of Clearstream, said: “We are pleased to welcome DCCC in our Global Liquidity Hub as a CCP partner. Our strategy is to grant the market access to a growing number of exposure locations such as globally fragmented CCPs while at the same time connecting to an increasing number of collateral locations. The most important and unique feature of our open model is that the collateral remains in its current environment and with our partner CSDs, with agent bank and with global custodian partners.”

This unique model, where assets and collateral remain with Clearstream’s partners, avoids the creation of new systemic risks and at the same time paves the way for cost-effective and efficient collateral identification and allocation on a global basis. The open architecture of the Global Liquidity Hub best serves market participants who are looking to use liquidity from multiple sources to cover multiple exposure locations on an optimised basis.

The increasing number of exposure locations spread around the world (such as CCPs) joining the Global Liquidity Hub and of Clearstream’s worldwide strategic partners (such as CSDs and agent banks) allows Clearstream to become the prime source of liquidity and risk management for more and more market participants.

Clearstream has a longstanding presence in the Middle East. Its office in Dubai was opened in 1995 to cover both the Middle East and Africa with a team of local sales and relationship specialists.