Equity Finance
Break-out session
Euroclear Collateral Conference
Tuesday, 13 May 2014
Equity finance
Your needs
• A solid collateral management platform
• Strong asset servicing capabilities
• Managing your pool of collateral held
across different locations
• In an optimal way
• At low cost
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Euroclear Collateral management
One platform, multiple products
Repo
Seller
Securities
lending
Derivatives
Others
Borrower
Cash
Collateral
Loan(1)
Collateral
Purchaser
Lender
Collateral
Collateral Giver
Collateral Taker
(1) Optional
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Euroclear Collateral management
Supporting your equity finance business
Automatic processes
• Matching of triparty instructions
• Selection and allocation according
to defined eligibility sets
• Transfer of securities (FoP, DvP)
Integrated systems protect you
against settlement and custody risk
Dedicated support
Operational teams guide you in
your day-to-day operational needs
• Daily mark-to-market
• Margin calls and releases
• Asset servicing of collateral
• Substitute securities when required
►
Settlement needs
►
Custody needs
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Euroclear Collateral management
Mitigating market and liquidity risks
Eligibility
•Indices
•Sector
•Market cap.
•Turnover
•Price Volatility
•Security currency
•Issuer country
•ISIN code
•Max.quotation age
•…
ConcentrationsRestrictions
►
►
►
►
►
►
Haircuts
>100 indices from Asia, Europe and US
19 sectors: Auto, Chemicals, Basic
resources…
Minimum Market capitalization (USD MM)
Maximum ADTV (%)
Maximum price volatility (%)
Restrictions on underlying equities for
Convertibles and DRs
Auto exclude own securities
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Asset Servicing
Basic principles
Income events
Other corporate actions
Automatic reversals
for gross-paying events
Flexible substitutions
on mandatory
events
Substitutions
for taxable events
Optional substitution
on voluntary events
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Asset Servicing
A flexible solution
Need to finance positions over record date
► Option not to substitute for identical tax status
► Possibility to instruct voluntary events directly
on counterpart’s account
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A single pool of collateral
Extensive market coverage
Austria
Israel
Spain
Belgium
Italy
Slovakia
Denmark
Luxembourg
Sweden
Argentina
Dubai
The
Netherlands
Switzerland
Hong Kong
Brazil
Finland
Norway
UK
Japan
Canada
France
Poland
Mexico
Germany
Portugal
USA
Greece
Ireland
Singapore
…and more!!
Euroclear offers unparalleled interoperability
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Helping you throughout the day…
S1
D+1
S1
19:00
D
1:30
AutoSelect
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A single pool of collateral
Open Inventory Sourcing
Agent
Euroclear
Bank
ISO messages & reports
Global Position Manager
Euroclear Bank ICSD
Giver
Taker
(New) Inventory
manager module
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A single pool of collateral
Partnering for your benefit
• A smart way to make your domestic inventory held with BP2S or
Citi available for your Euroclear Bank triparty activity
• Your benefits:
►
Fully automated inventory management service
►
Fully automated settlement process, reducing settlement
uncertainty, errors, and operational risks
►
Efficiently pool your domestic collateral resources
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OIS coverage
Current markets and roll-out
Belgium
The
Netherlands
Germany
UK
Italy
Euroclear Bank
Triparty
France
USA
Singapore
Japan
Active
Q4-2014
Spain
Hong Kong
Q1-2015
2015-16
Covering Equities and Fixed Income securities
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Collateral optimisation
An intelligent allocation
Full flexibility at allocation
Define pools of collateral and the order
in which you wish to allocate them
E.g. Small caps
Secondary indices
Primary indices
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Collateral optimisation
But also beyond
Fail-driven
Automatic reshuffling whenever
more can be done with the available pool
Quality-driven
Automatic reallocation whenever
lower-quality collateral hits your longbox
Credit-driven
Credit optimisation by aligning the settlement
of starting and ending one-day repos
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Collateral optimisation
A comprehensive solution
Fail
reduction
Your benefits:
•A reduction in fails
•A maximisation of the use
of lower quality assets
Optimisation
•Minimised credit usage
•At no extra cost
Credit
usage
Quality
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Euroclear Collateral management
At what cost?
•
Most reporting is free
•
Low servicing fees (<1Bps)
•
Synergy with Fixed-Income
reduces fees further
A
strong
offer
Euroclear
offers the
best value
for money
Low
fees
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