- Bank of America and State Street to support launch of Cboe
Clear Europe's clearing service for securities financing
transactions
- Brings total number of launch participants to nine, comprising
a broad range of key market participants, including banks, clearing
firms, asset managers and custodians
- Launch on track for Q3 2024, subject to regulatory
approvals
AMSTERDAM and LONDON, April 4,
2024 /PRNewswire/ -- Cboe Clear Europe, Cboe's
Amsterdam-based pan-European
clearing house, today announced that it has secured the support of
additional participants to support the launch of its Central
Counterparty (CCP) clearing service for securities financing
transactions (SFTs). Bank of America and State Street have
committed to supporting the service from launch, which is expected
during Q3 2024, subject to regulatory approvals.
Their commitment brings the total number of launch participants
for the SFT clearing service to nine, comprising a broad range of
key market participants, including banks, clearing firms, asset
managers and custodians. This includes:
- Borrower Participants: ABN AMRO Clearing Bank, Bank of America,
Barclays, Citibank, Goldman Sachs and J.P. Morgan
- Agent Lender Participants: BNY Mellon, Citibank and State
Street
Vikesh Patel, President, Cboe
Clear Europe, said: "We are delighted to have added two major
participants in the European securities lending industry to the
group of firms supporting the launch of the SFT service and benefit
from their collective expertise as we finalise our offering. Their
recent commitment – and the calibre of the group of early adopters
we have assembled as a whole – clearly demonstrates the growing
need to introduce central clearing to the European SFT market and
help reduce risk in this key activity. Cboe Clear Europe is
uniquely positioned to provide this service and we couldn't be more
excited to bring our proven post-trade expertise to a new asset
class with the support of our partners, delivering significant
capital, operational and risk-mitigation efficiencies."
Alessandro Cozzani, Managing
Director, Bank of America, said: "We are excited to embark on this
journey with Cboe Clear Europe. Developing a cleared product for
securities lending is a natural evolution in our secured financing
market, which should allow for greater risk optimisation with
counterparties."
As previously announced, this new service is expected to
introduce matching, CCP clearing, settlement and post-trade
lifecycle management for SFT transactions in European cash equities
and ETFs. Subject to regulatory approval, the service will be
available to principal lenders, special participant lenders (UCITS
and non-UCITS) and borrowers, with settlement taking place in 19
European Central Securities Depositories (CSDs) with non-cash RQV
managed at 2 Tri-Party Collateral Agents and cash RQV via cash
correspondent banks. Because European SFTs
primarily occur on a bilateral basis and are not cleared,
the products face significantly increased capital demands and
credit risk limitations as a result of new regulations including
the implementation of the Basel III endgame and Basel IV frameworks
through the Capital Requirements Regulation (CRR) and Capital
Requirements Directive (CRD). The impact of such regulations may
lead to a reduced capacity and appetite to borrow or lend.
By offering access to a CCP clearing and settlement service
for SFTs, Cboe Clear Europe is expected to help clients
address these new rules, reduce their risk-weighted assets
exposures associated with bilateral SFTs and help support the
growth of this vital market. The service is expected to also bring
significant operational advantages including greater settlement
efficiency leading to a reduction in fail fines, elimination of
agent lender disclosures, and improved practices around fees
management, corporate actions, and post-trade lifecycle
processing.
Jan Treuren, SFT Product Lead,
Cboe Clear Europe, said: "The addition of Bank of America and State
Street demonstrates the growing momentum behind our service as we
approach its launch and our commitment to delivering innovative
client-driven services. We are working closely with all of our
launch participants to help shape the first phase of our SFT
service offering through a series of regular working groups and key
stakeholder meetings. This includes exploring expansion of the
service into other assets classes and jurisdictions. At launch,
Cboe Clear Europe will be the only pan-European CCP offering these
consolidated services for SFTs in European cash equities and
ETFs."
About Cboe Clear Europe
As a leading pan-European
equities clearing house, Cboe Clear Europe already currently offers
clearing services for cash equities to 47 trading venues. The
company enables Clearing Participants to manage their counterparty
credit risk and also to maximise operational efficiencies through
automated processing and the provision of netting opportunities. It
diversified into equity derivatives clearing in 2021 to support the
launch of CEDX, Cboe's pan-European equity derivatives
exchange.
Cboe Clear Europe operates as an independent subsidiary of the
Cboe group, retaining a separate governance structure and
management team. It is headquartered in Amsterdam and regulated by De Nederlandsche
Bank and by Autoriteit Financiële Markten. Further information on
the company and its services can be found here:
clear.cboe.com/europe
About Cboe Global Markets
Cboe Global Markets (Cboe:
CBOE), the world's leading derivatives and securities exchange
network, delivers cutting-edge trading, clearing and investment
solutions to people around the world. Cboe provides trading
solutions and products in multiple asset classes, including
equities, derivatives, FX, and digital assets, across North America, Europe and Asia
Pacific. Above all, we are committed to building a trusted,
inclusive global marketplace that enables people to pursue a
sustainable financial future. To learn more about the Exchange for
the World Stage, visit www.cboe.com.
Cboe Media
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+1-312-786-7559
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