Clearstream and Strate, the South African central securities depository, have signed a Letter of Intent (LOI) aimed at exploring a new triparty collateral management service for South Africa.
The service intends to target the collateralisation of exposures in the South African market.
As per the LOI, Strate will look to utilize Clearstream’s collateral management infrastructure, the Global Liquidity Hub, for the allocation, optimization and substitution of local collateral.
Clearstream said that the system operates on a fully automated basis in real time and could enable Strate clients to handle their domestic collateral holdings and exposures efficiently without the need to move collateral out of the domestic South African environment.s
Clearstream CEO Jeffrey Tessler said that the ongoing financial crisis and regulatory initiatives like EMIR or reforms like Basel III require market participants to improve their liquidity management.
"Companies need to more efficiently handle their collateral holdings and exposure, and our outsourcing service addresses this industry concern," added Tessler.