Collateral Exchange platform ColleX has executed its first T+0 triparty collateral loan, bringing improved efficiency to securities finance trading.
The trade was conducted between Bank of America Merrill Lynch and ING Bank N.V., with J.P. Morgan as collateral custodian; it was executed using one of ColleX’s 10 standardised baskets, which have been implemented across the major triparty agents. The transaction enabled the ‘ColleX Trader’ to borrow a triparty basket of collateral and achieve 100% re-use establishing the first true loan of triparty collateral. This transaction type reduces collateral cost and settlement risk as the trade executed and settled within 2 hours on trade date
Grant Davies, ColleX Head of Business Development said: “The success of ColleX is being driven by a growing collateral market. More than USD2.7 trillion of collateral is now managed by EMEA triparty custodians with Seg IM, CCP (Centrally Cleared Counterparty) margin and collateralisation of credit lines increasing demand for efficient collateral solutions. ColleX enables market participants to leverage triparty infrastructure, mobilize firm inventory and convert it into eligible collateral to meet these needs.”
“Given ING’s established reputation in securities financing and experience in tri-party transactions for our clients, we see the benefits of electronic trading in terms of transparency and efficiency. We are pleased to be a part of this innovation,” said ING’s Co-Head of Global Securities Finance Richard Pryce.
ColleX uses time-focused auctions and screen-based trade negotiation, allowing clients to cover collateral needs (or monetise long inventory) reducing cost, time and settlement risks. ColleX was launched in Q3 2016 as part of the widening portfolio of electronic services developed by BGC Brokers L.P.’s FENICS business. BGC Brokers is an affiliate of BGC Partners, Inc.