The new service, designed for the Brazilian market, will enable Cetip clients to handle their collateral exposure in their time zone and real-time, thus strengthening their risk profiles across their OTC derivative activities.
Clearstream said the service will build on its collateral management infrastructure. It will be offered on a fully automated basis incorporating auto-allocation, auto-substitutions and optimization of the underlying collateral, leveraging the full benefit of collateralization.
Deutsche Borse’s subsidiary Clearstream added that the triparty collateral management service will initially focus on the collateralization of OTC derivative exposures managed via Cetip.
The service will enable Brazilian participants to mobilize, domestically, assets eligible at Cetip and SELIC, the central depository of securities issued by the National Treasury and the Brazilian central bank.
In a second phase it is envisaged to also target assets eligible at Clearstream in order to fulfill collateral obligations out of an enlarged collateral pool.
Cetip CEO Luiz Fernando Vendramini Fleury said the triparty collateral management system developed with Clearstream meets the needs of both market participants and Cetip’s local regulatory bodies.
"The new service helps to increase liquidity in a more secure and transparent manner – and at lower cost. The collateral management service provided by an authorized outsourced company and under the supervision of the regulating bodies brings more security to the Brazilian OTC derivative market," Vendramini Fleury said.
