Euroclear Bank and Citi have teamed up to unveil a tri-party collateral management arrangement, which provides the assets held at Citi as collateral for mutual clients through Euroclear's tri-party services.
Subsequently, the equity and fixed-income positions of Citi’s custody network will become eligible assets to be used as collateral when Euroclear Bank serves as the tri-party agent and manages the collateralization process.
Based on terms of the deal Citi will continue to hold the assets as custodian, while the securities will move across markets and time zones through Euroclear’s global ‘Collateral Highway’.
This service will provide clients with better interoperability and options as to where they finance and custody their assets.
The collaboration will also increase the pool of potential collateral that can be used to cover exposures arising from a wide variety of transactions, such as repos, loans, derivatives, CCP margins and central bank liquidity.
According to the bank, the potential pool of collateral held by Euroclear Bank is equivalent to €23 trillion, together with the assets held within Citi’s Direct Clearing and Custody network spreading over 60 countries.
Belgium-based Euroclear Bank trades as an international central securities depository and offers cross-border settlement and related services for transactions involving domestic and international bonds, equities and investment funds.
Trading in over 160 nations and jurisdictions, Citi serves approximately 200 million customer accounts and provides consumer banking and credit, corporate and investment banking, securities brokerage, transaction services and wealth management.