Clearstream, the international central securities depository within Deutsche Boerse Group and the Banque centrale du Luxembourg (BCL) are launching a new service allowing all Luxembourg based banks to optimise further their use of collateral to cover any operation with the Eurosystem via BCL.
Through their securities account with Clearstream, Luxembourg banks will manage one central, multi purpose collateral pool allowing them to not only cover their monterary policy operations but also to perform other operations necessitating collateral among which intraday credit operations in TARGET2, the real time gross settlement system for the euro.
Luxembourg based banks are expected to benefit from the flexibility of Clearstream’s fully automated CmaX (collateral management eXchange) system. This includes automatic allocation of collateral, eligibility checks, substitutions of collateral, mark to market valuation, margin calls, re-use of collateral and reporting facilities.
Operationally, BCL is expected to communicate electronically to Clearstream the amount to be collateralized and Clearstream will ensure that eligible assets are pledged as collateral. Assets eligible at the European Central Bank and for which Clearstream already has assessed links represent some 40,000 securities, 90% of the total number of eligible assets.
