Slide 1 - Euroclear

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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
2
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
3
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!!
4
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
5
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
6
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
7
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
8
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
9
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
10
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
11
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
12
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
13
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
14
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
15
Triparty Collateral Management
Getting started
Interested in joining the Collateral Highway?
Contact your relationship manager or
one of our specialists
Olivier de Schaetzen
[email protected]
+32 (0)2 326 2884
Simon Mees
[email protected]
+32 (0)2 326 1626
16
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