Eurosystem collateral
management developments
Removal of the repatriation requirement
Fiona van Echelpoel
27th COGESI Meeting
Frankfurt am Main, 22 November 2012
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Coming up …
I. Introduction
II. Correspondent Central Banking Model (CCBM)
III. Removal of the repatriation requirement (RR)
IV. Implementation
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I. Introduction
I. Introduction
• Three forthcoming enhancements to Eurosystem
collateral management services :
(i) the removal of the repatriation requirement
from CCBM
(ii) cross-border triparty collateral management
services via CCBM
(iii) the support of T2S auto-collateralisation (not
covered today)
• Items (i) and (ii) have been requested by the market
and are scheduled to go-live in 2014
• Internal Eurosystem preparations are under way
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II. Correspondent Central
Banking Model (CCBM)
II. Correspondent Central Banking Model (CCBM)
• In place since 1999 to ensure equal treatment of
Eurosystem counterparties
• Counterparties may obtain credit from their Home
Central Bank on the basis of collateral transferred to
another NCB, the Correspondent Central Bank
• All eligible assets are available to all counterparties,
regardless of where in the euro area the assets or the
counterparty are located
• Represents main channel for cross-border mobilisation
of eligible assets with the Eurosystem
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How the CCBM works
Release of Credit
Bank
5
Country A
1
Mobilisation instruction
Confirmation
Cash account
Bank in Country A
4
NCB
Country A
1
2
CCBM
message
Settlement
confirmation
NCB
Country B
3
CSD A
Central
Securities
Depository
Matching
Delivery of collateral instruction
3
CSD B
Central
Securities
Depository
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III. Removal of the repatriation
requirement (RR)
III. Removal of the repatriation requirement (RR)
• Part of the CCBM since its establishment in 1999
• Requires Eurosystem counterparties to transfer
assets to the respective issuer SSS before they can be
mobilised as collateral for Eurosystem credit
operations
• To be abolished in the course of 2014, thus
eliminating the need to move assets from the
investor SSS to the issuer SSS in CCBM operations
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III. Removal of the repatriation requirement (RR)
Main direct benefits of the removal of RR:
• no need to transfer assets back to the issuer SSS;
• new mobilisation channel combining CCBM with
eligible SSSs links emerges and allows any SSS/eligible
link to be used by any Eurosystem counterparty to
mobilise eligible assets as Eurosystem collateral i.e.
Correspondent Central Bank (CCB) today acts as CCB
only for assets issued in local CSD – with the removal of
the repatriation requirement, CCB can additionally act
as CCB for assets held in local CSD via eligibile links
• increased operational and cost efficiency
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III. Removal of the repatriation requirement
Further benefits arising from the removal of the RR:
• Facilitates more optimal use of cross-border triparty
collateral management services via the CCBM
• Supports possible use of euro-denominated EEA noneuro area collateral provided that:
– condition of settlement within the euro area is
satisfied (via an eligible link between the EEA noneuro area SSS and a euro area SSS)
– collateral is equally available to all Eurosystem
counterparties (via CCBM – combination of CCBM
with eligible (I)CSD links)
– collateral meets other Eurosystem eligibility
requirements
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IV. Implementation
IV. Implementation
• Work underway at Eurosystem level to adapt local
collateral management systems (CMS) and CCBM
documentation in view of the removal of the RR
• Testing of CMS adaptations to be launched in course
of 2013, running into 2014; extent of involvement of
external parties (e.g. (I)CSDs and counterparties) still
to be seen
• Assessment of EEA non-euro CSDs and their
respective links with euro area (I)CSDs to be
launched upon request of (I)CSDs in order to allow
for use of eligible euro-denominated EEA assets
• Go-live of removal of RR in 2014
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Thank you for your attention