Triparty for corporates
Break-out session
Euroclear Collateral Conference
Tuesday, 13 May 2014
Moving from unsecured to secured investment
Introducing Repo
Post-crisis, a treasurer’s three objectives:
• Investing in line with term liabilities
• Securing his investment
• Obtaining a reasonable return
The repo market is the ideal meeting place for lenders
and borrowers looking for secured term investments
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Moving from unsecured to secured investment
Principles of Repo
Opening
Cash
€ 200m
Collateral provider
Cash provider
Securities
Closing
Securities
Collateral provider
€ 200m + interest
Cash provider
Cash
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Moving from unsecured to secured investment
Repo – what value does it bring ?
Libor: the
unsecured
curve
Spread
between
unsecured &
secured
curve
Post crisis
3-month
liability
invested in a
1-week asset
opportunity
gain
You can invest
longer term in
a secured
way!!
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Moving from unsecured to secured investment
Higher returns for secured financing
EUR rate for Investment grade collateral (BBB and above)
unsecured
Euribor rate
average rates
Euroclear Bank
triparty repo
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Triparty collateral management
Benefits for the Corporate
The best of both worlds
• The benefits of Repo
• Minimal operational effort through a triparty agent
► Complete outsourcing of collateral management tasks
► No fees for cash providers
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Triparty Collateral management
The repo outsourcing solution
Cash
€ 200m
Collateral provider
Cash provider
Securities
Euroclear
During the lifecycle of a repo
• Transfer of eligible securities against cash in a secured way
• Valuation of securities on daily basis to make sure always equal to 200m cash
• Margin calls and releases according to valuation
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Triparty Collateral management
The repo outsourcing solution
Automatic processes
• Matching of trade details
• Selection according to eligibility
• Transfer of securities
Integrated systems protect you
against settlement and custody risk
Dedicated support
• Daily mark-to-market
• Margin calls and releases
• Asset servicing of collateral
Operational teams guide you in
your day-to-day operational needs
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Triparty Collateral management
Communication means
•Euroclear has a light footprint:
►Instructions
can be sent via Bloomberg, Fax or Swift Lite
►Web-based
and e-mail reporting of collateral received,
at flexible frequencies
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Triparty Collateral management
Entering the repo market
Bilateral repo agreement
e.g. GMRA
Enables trading repo
Repurchase Service
Agreement
Corporate
treasurer
Cash
Borrower
Outsources collateral
management to
Euroclear Bank
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Triparty Collateral management
Admission and legal effort
•Euroclear Bank has simplified its admission and
registration process to ensure smooth onboarding
•But negotiating and signing a bilateral GMRAs remains
a time-consuming and costly exercise…
Repo is still a challenge for many treasurers
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Introducing RepoAccess
A new service for Corporates
•Euroclear’s answer to the challenge posed by the GMRA
is RepoAccess, a free service available to Collateral Takers
•Through RepoAccess, Euroclear Bank leverages its existing
GMRAs with all major Collateral Givers to set-up new
relationships between the Giver and RepoAccess clients
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Euroclear Bank RepoAccess
Principles
Euroclear obtains a mandate to set-up a GMRA
• Euroclear will establish a new GMRA, based on its existing
GMRA, in the treasurer’s name
• A treasurer can have the benefits of repo while being
shielded from negotiating a GMRA
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Euroclear Bank RepoAccess
Legal framework
Bilateral repo agreement
(GMRA)
The Agency agreement
enables Euroclear to handle
the set-up of the GMRA
Repurchase Service
Agreement
Corporate
treasurer
Agency
agreement
Cash
Borrower
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Euroclear Bank RepoAccess
Advantages
With RepoAccess, have
• The benefits of industry-standard agreements
(vs proprietary alternatives)
• Flexibility over post-trade settlement
(bilateral, other triparty agents)
• Full control of the collateral profile and of trade execution
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Triparty Collateral Management
Getting started
Interested in joining the Collateral Highway?
Contact your relationship manager or
one of our specialists
Olivier de Schaetzen
Olivier.deschaetzen@euroclear.com
+32 (0)2 326 2884
Simon Mees
Simon.mees@euroclear.com
+32 (0)2 326 1626
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