4sight Financial Software, a leading provider of software and consultancy to the Securities Finance and Collateral Management markets has developed an interface between Clearstream’s KAGplus service and the 4sight Securities Lending and Borrowing software solution.
KAGplus is a collateral management service offered by Clearstream Banking AG. German funds are restricted by the German investment Act (InvG) from lending in excess of 10% of their assets by value unless they trade through Clearstream’s KAGplus platform. KAGplus helps firms adhere to these guidelines by pooling and allocating pledged collateral for each fund while following sound risk management principles.
4sight developed the interface as part of a wider project to implement its 4sight Securities Finance system for a European bank. The client required the ability to communicate Securities Lending trades booked in the 4sight Securities Finance solution to KAGplus.
When initiating a KAGplus enabled borrow in 4sight, the system automatically sends a SWIFT message to Clearstream in order to register the trade with the KAGplus system. The borrow will remain blocked in an “unverified” state until an inbound message from KAGplus informs the system that the position has been validated by Clearstream. The interface includes alerts to warn the user of a negative outcome (e.g. failure to register in KAGplus due to insufficient availability).
According to Martin Seagroatt, 4sight’s Head of Marketing: “The new interface will enable users of 4sight’s Securities Finance and Collateral Management system and the KAGplus service to increase straight through processing of trades and automate trade lifecycle management. This latest interface increases the integration options offered by 4sight Securities Finance as we leverage the connectivity we offer with third party solutions and service providers.”
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