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Triparty for corporates Break-out session Euroclear Collateral Conference Tuesday, 13 May 2014

Triparty for corporates Break-out session Euroclear Collateral Conference Tuesday, 13 May 2014. Moving from unsecured to secured investment Introducing Repo. Post-crisis, a treasurer’s three objectives: Investing in line with term liabilities Securing his investment

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Triparty for corporates Break-out session Euroclear Collateral Conference Tuesday, 13 May 2014

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  1. Triparty for corporatesBreak-out session Euroclear Collateral ConferenceTuesday, 13 May 2014

  2. Moving from unsecured to secured investmentIntroducing Repo Post-crisis, a treasurer’s three objectives: • Investing in line with term liabilities • Securing his investment • Obtaining a reasonable return • The repo market is the ideal meeting place for lenders and borrowers looking for secured term investments

  3. Collateral provider Moving from unsecured to secured investmentPrinciples of Repo Opening Cash € 200m Cash provider Securities Closing Securities Collateral provider Cash provider € 200m + interest Cash

  4. Moving from unsecured to secured investmentRepo – what value does it bring ? Libor: the unsecured curve Post crisis 3-month liability invested in a 1-week asset Spread between unsecured & secured curve You can invest longer term in a secured way!! opportunity gain

  5. Moving from unsecured to secured investment Higher returns for secured financing EUR rate for Investment grade collateral (BBB and above) unsecured Euribor rate average rates Euroclear Bank triparty repo

  6. Triparty collateral managementBenefits for the Corporate • The benefits of Repo • Minimal operational effort through a triparty agent • Complete outsourcing of collateral management tasks • No fees for cash providers The best of both worlds

  7. Triparty Collateral managementThe repo outsourcing solution Cash € 200m Collateral provider Cash provider Securities Euroclear During the lifecycle of a repo • Transfer of eligible securities against cash in a secured way • Valuation of securities on daily basis to make sure always equal to 200m cash • Margin calls and releases according to valuation

  8. Triparty Collateral managementThe repo outsourcing solution Automatic processes • Integrated systems protect you • against settlement and custody risk • Matching of trade details • Selection according to eligibility • Transfer of securities • Daily mark-to-market • Margin calls and releases • Asset servicing of collateral Dedicated support Operational teams guide you in your day-to-day operational needs

  9. Triparty Collateral managementCommunication means • Euroclear has a light footprint: • Instructions can be sent via Bloomberg, Fax or Swift Lite • Web-based and e-mail reporting of collateral received, at flexible frequencies

  10. Triparty Collateral managementEntering the repo market Bilateral repo agreement e.g. GMRA Enables trading repo Repurchase Service Agreement Corporate treasurer Cash Borrower Outsources collateral management to Euroclear Bank

  11. Triparty Collateral managementAdmission and legal effort Repo is still a challenge for many treasurers Euroclear Bank has simplified its admission and registration process to ensure smooth onboarding But negotiating and signing a bilateral GMRAs remains a time-consuming and costly exercise…

  12. Introducing RepoAccessA new service for Corporates Euroclear’s answer to the challenge posed by the GMRA is RepoAccess, a free service available to Collateral Takers Through RepoAccess, Euroclear Bank leverages its existing GMRAs with all major Collateral Givers to set-up new relationships between the Giver and RepoAccess clients

  13. Euroclear Bank RepoAccess Principles Euroclear obtains a mandate to set-up a GMRA • Euroclear will establish a new GMRA, based on its existing GMRA, in the treasurer’s name • A treasurer can have the benefits of repo while being shielded from negotiating a GMRA

  14. Euroclear Bank RepoAccess Legal framework Bilateral repo agreement (GMRA) The Agency agreement enables Euroclearto handle the set-up of the GMRA Repurchase Service Agreement Corporate treasurer Cash Borrower Agency agreement

  15. Euroclear Bank RepoAccess Advantages With RepoAccess, have The benefits of industry-standard agreements (vs proprietary alternatives) Flexibility over post-trade settlement (bilateral, other triparty agents) Full control of the collateral profile and of trade execution

  16. Triparty Collateral ManagementGetting started Interested in joining the Collateral Highway? Contact your relationship manager or one of our specialists Olivier de Schaetzen Olivier.deschaetzen@euroclear.com +32 (0)2 326 2884 Simon Mees Simon.mees@euroclear.com +32 (0)2 326 1626

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