Clearstream and the Dubai Commodities Clearing Corporation (DCCC), the central counterparty (CCP) of the Dubai Gold & Commodities Exchange (DGCX), have agreed to cooperate on collateral management for CCP margining.
The Middle Eastern CCP will join Clearstream’s central counterparty network by connecting to the company’s integrated collateral management environment, the Global Liquidity Hub.
By the end of the first quarter of 2014, DGCX customers will be able to leverage the collateral pools of Clearstream and its global strategic partners to meet margin requirements at DCCC through the Global Liquidity Hub.
“We are happy to form an alliance with leading global post-trading services provider Clearstream to support our members in seamlessly and efficiently accessing global liquidity pools,” said Gary Anderson, CEO of Dubai Gold & Commodities Exchange. “Partnerships like these are key building blocks in our efforts to transform the Middle East’s derivatives marketplace and become a key hub in the global liquidity infrastructure map.”
Demand for collateral is expected to grow significantly, driven by both market forces and regulatory reform, and DGCX is keen to support its members in deploying collateral optimally without fragmentation.
Clearstream’s Global Liquidity Hub enables market participants to manage their growing number of worldwide exposures on a fully automated basis out of a single, global collateral pool which consolidates assets held at Clearstream and its strategic partners.
“The partnership with Clearstream strengthens our overall offering for DGCX members with a service that promotes significant efficiency gains in managing and transferring collateral,” said Gaurang Desai, chief operating officer of DCCC. “This alliance takes our strategic efforts of being the CCP of choice in the region a notch further by providing products and services of international standards to our customers.”
Clearstream has a longstanding presence in the Middle East. Its office in Dubai was opened in 1995 to cover both the Middle East and Africa with a team of local sales and relationship specialists.
“The Clearstream alliance not only allows us to help our members in addressing key liquidity requirements but also in creating new value and revenue opportunities through improved collateral management,” Desai said.
Under the Global Liquidity Hub model, assets and collateral remain with Clearstream’s partners, avoiding the creation of new systemic risks and at the same time enabling efficient collateral identification and allocation on a global basis.
The open architecture of the Global Liquidity Hub best serves market participants who are looking to use liquidity from multiple sources to cover multiple exposure locations on an optimized basis, according to Clearstream/ The increasing number of exposure locations spread around the world (such as CCPs) joining the Global Liquidity Hub and of Clearstream’s worldwide strategic partners (such as CSDs and agent banks) allows Clearstream to become a source of liquidity and risk management for market participants.