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Eurex Repo in cooperation with Clearstream to launch additional GC Pooling segment for corporate firms

Release date: 13 Mar 2012 | Eurex Repo

Eurex Repo in cooperation with Clearstream to launch additional GC Pooling segment for corporate firms

GC Pooling Select to go live in Q4 2012 - First marketplace for centrally cleared and secured funding for banks and their corporate customers providing full integration of Clearstream’s collateral and liquidity management facilities

Eurex Repo, Eurex Clearing and Clearstream, all part of Deutsche Boerse Group, will introduce an extension of the integrated and innovative GC Pooling market for secured funding which will be made available for active GC Pooling participants (banks) to further strengthen their service scope towards corporate customers. Launch is scheduled for Q4 2012. The leading GC Pooling marketplace for secured interbank transactions will be enhanced to contribute to re-building trust between banks and their existing non-financial customers, e.g. corporates, asset managers and pension funds. The new market segment GC Pooling Select will be specifically designed for secured short-term cash investments from non-financial clients to banks to avoid the systemic risks of unsecured money market operations.

Eurex Repo’s new market segment aims to support the growing need of non-financial institutions for secured funding by adding the known benefits of GC Pooling, i.e. electronic trade entry, mitigation of counterparty risk via Eurex Clearing’s central counterparty (CCP) and state-of-the-art collateral management of Clearstream Banking. These advantages will be added to the existing GC Pooling structure as the existing relationships between banks and their corporate clients will remain unchanged.

Benefits for the current participants of GC Pooling are additional flow without further investments on their side while keeping the positive effects of risk and balance sheet netting. The most important benefits for corporate clients are the mitigation of any counterparty risk, as their cash activities are protected through the inclusion of Eurex Clearing’s CCP. Simultaneously, all cash and collateral management functionalities will be handled within Clearstream’s Liquidity Hub including a seamless integration of the two market segments to ensure an optimized cash and collateral usage. To enter into the new market, very limited efforts are required on the client’s side.

"Our new GC Pooling Select market segment is designed to enhance the existing market infrastructure. We will preserve the relationships between banks and their non-financial clients but will enable them to benefit from our integrated combination of electronic trading and processing, central clearing and collateral management", said Marcel Naas, Managing Director at Eurex Repo.

"With this pioneering service concept, the industry will have access to the first electronic "B2C" money market trading facility incorporating a central counterparty without impacting the important relationships between banks and non-financial-institutions. The full integration of all collateral management services offered by Clearstream will lead to further optimized, transparent and consolidated collateral and liquidity management reducing collateral fragmentation and the related risks and costs", added Stefan Lepp, Chief Executive Officer of Clearstream Banking AG, Frankfurt.

About Eurex Repo
Eurex Repo ranks among the leading markets for electronic repo trading and operates five markets in secured funding and financing: The GC Pooling, Euro Repo, Swiss Franc Repo, OTC Spot and SecLend Market. More than 320 participants from ten countries are currently admitted to trading on Eurex Repo’s markets. The Swiss Franc Repo Market was launched in 1999, the Euro Repo Market followed in 2001 and GC Pooling started in 2005. The Euro Repo and GC Pooling markets provide all advantages of electronic trading in combination with the anonymity of the central counterparty Eurex Clearing AG. Eurex Repo is a wholly-owned subsidiary of Eurex Frankfurt AG. Repo trading allows banks to lend/borrow their security holdings in exchange for money and receive or grant liquidity as a result. The ECB and the majority of national European central banks use repo transactions to control money supply.

About Clearstream
Clearstream is an international securities depository and is responsible for post-trade services within Deutsche Börse Group. With its Global Securities Financing services, Clearstream offers settlement and custodial services along with instruments for collateral management. The service business comprises tri-party repo, securities lending and collateral management. In 2009, monthly outstanding volume for GSF broke the €500 billion mark for the first time.