Hong Kong Monetary Authority and Clearstream to launch cross-border collateral management cooperation

The Hong Kong Monetary Authority (HKMA) and Clearstream jointly announced today their cooperation in providing cross-border collateral management and liquidity services in Hong Kong. The HKMA and Clearstream plan to launch the services in the first quarter of 2013.

The collateral pool of Clearstream currently stands at more than EUR 550 billion and consists of a wide range of asset classes eligible for collateral use which includes, among others, fixed income assets, equities and investment funds. With the partnership with the HKMA, international financial institutions (as a collateral giver) will be able to use their extended pool of collaterals in Clearstream to conduct repo transactions with and obtain liquidity from members (as a collateral receiver) of the HKMA’s Central Money Markets Unit (CMU).

The service will continue to benefit international financial institutions with streamlined access to liquidity in Hong Kong, in particular for Hong Kong dollars and offshore Renminbi, while local financial institutions will also be able to optimise the utilisation of their domestic liquidity based on a broader spectrum of international securities. At the same time, this service will support customers of Clearstream’s Global Liquidity Hub to further enhance the utilisation of their collateral on an optimized basis.

Peter Pang, Deputy Chief Executive of the HKMA, said, “We welcome Clearstream in joining forces with the HKMA and other global triparty repo systems in providing the cross-border collateral management services at the global and domestic levels. The expanded coverage of the cross-border collateral management services will further promote the development of a cost effective and efficient repo market in Hong Kong and enhance financial stability through the wider use of collateral to reduce credit risk among financial institutions.”

Jeffrey Tessler, Chief Executive Officer of Clearstream, said: “We are pleased to partner with the HKMA and to be developing this additional access to liquidity in Hong Kong. The cooperation leverages our extensive experience in Asia, where we have been present and active for more than 20 years, and enables Hong Kong institutions to take advantage of our award-winning collateral management and triparty repo services, offered through our Global Liquidity Hub.”