The collateral management rules surrounding the correspondent central banking model (CCBM), which was set up for the launch of the euro over a decade ago, have been relaxed at Sibos 2013 by the Eurosystem.
The repatriation requirements under the CCBM model will cease from May 2014, meaning that in future counterparties in the Eurosystem will be able to consolidate their holdings across Europe, rather than hold them domestically, thereby increasing the mobility of capital across Europe. Moving collateral from the investor central security depositor (CSD) to the issuer CSD across borders in France, Germany, Italy, Spain so forth will no longer be necessary once the change comes into effect and will transform the correspondent banking market in Europe.
The announcement was made by Benoit Coeure, chair of the Committee on Payment and Settlement Systems (CPSS) and a member of the board at the European Central Bank (ECB), which of course stands behind the euroland Eurosystem, at the Sibos 2013 trade show in Dubai, UAE.
Speaking as part of the morning session at Sibos entitled ‘Key challenges and opportunities for the integration of European financial market infrastructures’ Coeure also revealed that in September 2014 the Eurosystem will make another important change, which is to support cross-border tri-party collateral management services. The new service launching in September 2014 is available to all firms, such as Euroclear, Clearstream and so on. In practice, it will allow counterparties to use tri-party services offered by an agent in another country.
“I am confident these changes will support collateral management services across Europe,” said Coeure.
• bobsguide is producing a daily show report live from the Sibos 2013 trade show in Dubai, UAE, all this week. Please check the homepage or visit the bobsguide Sibos 2013 blog section to view the daily reports. More general blogs and the new bobsguide blogger (aka contributing editor) section can be viewed via the highlighted link.
By Neil Ainger
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