easyJet completes first triparty trade
30 October 2013 Frankfurt
Image: Shutterstock
A partnership between Clearstream and 360T to develop a new triparty repo service has just seen its first trade completed.
Corporate and institutional clients were the main target for the new service developed at the start of 2013 by Clearstream鈥檚 global securities financing team and 360T Trading Networks, an electronic trading platform.
It incorporated a streamlined triparty repo solution that was to be delivered through 360T鈥檚 front office facilities and integrated with Clearstream鈥檚 global liquidity hub.
360T would then offer the service to 鈥渕atched鈥� trading partners, which are members of its client database. These trading counterparties will have signed Clearstream鈥檚 collateral management service agreement (CMSA) so that Clearstream can take care of all the administration of the triparty repo transaction. This cooperation extends the Clearstream service to non-financials.
The process was designed to be as easy and as secure as possible, with the cash provider being able to choose from a range of standardised baskets or create their own collateral schedules.
On 17 October, the first triparty trade was conducted on the trading platform of 360 Treasury Systems AG and settled via Clearstream.
The trade involved easyJet, which was the cash giver and Commerzbank, which was the cash taker.
Philip Stewart, assistant treasurer of easyJet, said: 鈥渆asyJet adopts a prudent investment policy, with security of cash the number one priority. This, in addition to the ability to increase tenor and maximise return on our core cash, was a key factor when exploring alternatives to time deposits and money market funds. We took the decision to begin using triparty repo due to the liquidity of the repo market and the fact that collateralised deposits are more secure, while also benefiting from the higher yields on offer for longer dated deposit terms.鈥�
He added that Clearstream was chosen due to their desire to provide a service specifically tailored to corporates.
Carlo K枚lzer, 360T CEO and founder, said that the service opens a new area of trading in cash management and that he expects this to become a market standard soon.
鈥淐ollateral management is gaining in importance in the market and with Clearstream as a partner we can offer our clients a proven concept. Furthermore, the case shows that when 鈥淏est of Breed鈥� service providers work together, they are able to create highly valuable value chains for the customer as proven by Commerzbank, Clearstream and 360T in this case.鈥�
The partnership between Clearstream and 360T is part of a series of recent developments designed to facilitate easy and streamlined access to triparty repo.
Earlier this year, Clearstream developed a new legal master agreement for triparty repo transactions, Clearstream Repurchase Conditions, to enable market participants to sign just one contract for multiple counterparties and speed up counterparty 鈥渕arriage broking鈥�.
The repurchase conditions, said Clearstream, are proving to be of particular interest to new players in the repo market such as corporates who are currently deterred by the existing lengthy contract negotiation process.
They are expected to appeal to corporates entering into reverse repos to secure their financing and then, optionally, re-use the collateral they receive to cover OTC derivative margin requirements with clearing members or central counterparties (CCPs).
Corporate and institutional clients were the main target for the new service developed at the start of 2013 by Clearstream鈥檚 global securities financing team and 360T Trading Networks, an electronic trading platform.
It incorporated a streamlined triparty repo solution that was to be delivered through 360T鈥檚 front office facilities and integrated with Clearstream鈥檚 global liquidity hub.
360T would then offer the service to 鈥渕atched鈥� trading partners, which are members of its client database. These trading counterparties will have signed Clearstream鈥檚 collateral management service agreement (CMSA) so that Clearstream can take care of all the administration of the triparty repo transaction. This cooperation extends the Clearstream service to non-financials.
The process was designed to be as easy and as secure as possible, with the cash provider being able to choose from a range of standardised baskets or create their own collateral schedules.
On 17 October, the first triparty trade was conducted on the trading platform of 360 Treasury Systems AG and settled via Clearstream.
The trade involved easyJet, which was the cash giver and Commerzbank, which was the cash taker.
Philip Stewart, assistant treasurer of easyJet, said: 鈥渆asyJet adopts a prudent investment policy, with security of cash the number one priority. This, in addition to the ability to increase tenor and maximise return on our core cash, was a key factor when exploring alternatives to time deposits and money market funds. We took the decision to begin using triparty repo due to the liquidity of the repo market and the fact that collateralised deposits are more secure, while also benefiting from the higher yields on offer for longer dated deposit terms.鈥�
He added that Clearstream was chosen due to their desire to provide a service specifically tailored to corporates.
Carlo K枚lzer, 360T CEO and founder, said that the service opens a new area of trading in cash management and that he expects this to become a market standard soon.
鈥淐ollateral management is gaining in importance in the market and with Clearstream as a partner we can offer our clients a proven concept. Furthermore, the case shows that when 鈥淏est of Breed鈥� service providers work together, they are able to create highly valuable value chains for the customer as proven by Commerzbank, Clearstream and 360T in this case.鈥�
The partnership between Clearstream and 360T is part of a series of recent developments designed to facilitate easy and streamlined access to triparty repo.
Earlier this year, Clearstream developed a new legal master agreement for triparty repo transactions, Clearstream Repurchase Conditions, to enable market participants to sign just one contract for multiple counterparties and speed up counterparty 鈥渕arriage broking鈥�.
The repurchase conditions, said Clearstream, are proving to be of particular interest to new players in the repo market such as corporates who are currently deterred by the existing lengthy contract negotiation process.
They are expected to appeal to corporates entering into reverse repos to secure their financing and then, optionally, re-use the collateral they receive to cover OTC derivative margin requirements with clearing members or central counterparties (CCPs).
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