CDS Clearing and Depository Services (CDS), Canada's equities and fixed income clearing house, and the Canadian Derivatives Clearing Corporation (CDCC), each wholly-owned subsidiaries of TMX Group, have agreed on a joint initiative with Euroclear to develop a new collateral management service for Canada’s capital markets.
Under the terms of a memorandum of understanding (MOU), CDS, CDCC and Euroclear are working together to develop an automated collateral management service for the domestic Canadian market.
The service will be designed to improve interoperability between existing domestic collateral pools and consequently result in increased liquidity and efficient collateral mobility.
It will also align the Canadian market to global collateral management standards and provide the foundation for future international collateral mobility, says Euroclear.
The utilisation of CDS’ Post-Trade Modernisation settlement platform and Euroclear’s Collateral Highway will enable market participants to mobilise collateral assets across their various accounts, including repo, securities lending, cleared and uncleared margin accounts.
Jay Rajarathinam, president of CDCC and CDS and chief technology and operations officer for TMX Group, says: “We are excited to be working with Euroclear to deliver a solution aimed at enhancing collateral mobility and liquidity in Canada, placing our post-trade infrastructure on par with the most advanced markets in the world.”
According to Rajarathinam, the initiative represents a significant step forward in their ongoing efforts to keep pace with the ever-evolving collateral requirements of capital markets.
Jo Van de Velde, managing director, head of group strategy and product expansion, Euroclear, comments: “Building on our strong history in the Canadian market, where we have provided international services for many years, we will now provide the functionalities to connect our Collateral Highway to the Canadian market, improving interoperability between collateral pools.”
The service, which targeted for launch in H2 2022, pending regulatory approvals, will complement and connect existing service providers in the collateral ecosystem and facilitate the funding of Canadian market activity using assets domiciled in Canada.
Last month, Euroclear launched a new data service, offering liquidity analysis on all fixed income instruments settled within the CSD.
