Cboe Clear Europe clears first securities financing transactions
31 March 2025 Europe
Image: Lila_Patel/stock.adobe.com
Cboe Clear Europe has launched a central clearing service for European securities financing transactions (SFTs) in cash equities and ETFs.
Natixis Corporate & Investment Banking acted as a principal lender against J.P. Morgan as a borrower in the first trades cleared through the new service, which aims to transform the bilateral process for SFTs in European equities and ETFs into a centrally cleared model.
鈥淐learing SFTs at Cboe Clear Europe enhances our capital efficiencies and reduces operational complexities associated with these products,鈥� says Gr茅goire Froehlich, global securities financing trader at Natixis Corporate & Investment Banking.
Vikesh Patel, president of Cboe Clear Europe, comments: 鈥淭his launch responds to strong client demand for a clearing solution to help improve the capital efficiencies associated with stock borrowing and lending activities 鈥� delivering significant benefits to all participants in this ecosystem, including asset owners which lend out inventory as a way of generating additional income for their members.鈥�
The new service is available to principal lenders, special participant lenders, and borrowers, with settlements conducted across 19 European central securities depositories (CSDs).
It utilises BNY and J.P. Morgan as triparty collateral agents, while Pirum serves as the transmitter of new trade instructions and post-trade lifecycle events on behalf of clients.
鈥淲e鈥檙e excited to provide clients with the option to clear securities lending transactions through Cboe鈥檚 new service while leveraging BNY鈥檚 global collateral platform to manage their liquidity and to access cleared and uncleared collateral markets globally,鈥� says Gesa Johannsen, executive platform owner of Global Collateral at BNY.
The service also provides margin and operational advantages within major cash equities clearing houses in Europe, the firm says.
These include savings from cross-margining between cash equities and SFTs, greater settlement efficiencies, elimination of agent lender disclosures, as well as improved practices around fees management and corporate actions.
In addition to the firms that have already used the service, several banks, asset managers, broker-dealers, and agent lenders have completed final testing in preparation for clearing.
Jan Treuren, SFT product lead at Cboe Clear Europe, adds: 鈥淲e expect activity to increase in the weeks and months ahead, with active onboarding and testing already underway with principal lenders, agent lenders acting on behalf of special participant lenders 鈥� including UCITS and non-UCITS beneficial owners 鈥� and the borrower community.鈥�
Natixis Corporate & Investment Banking acted as a principal lender against J.P. Morgan as a borrower in the first trades cleared through the new service, which aims to transform the bilateral process for SFTs in European equities and ETFs into a centrally cleared model.
鈥淐learing SFTs at Cboe Clear Europe enhances our capital efficiencies and reduces operational complexities associated with these products,鈥� says Gr茅goire Froehlich, global securities financing trader at Natixis Corporate & Investment Banking.
Vikesh Patel, president of Cboe Clear Europe, comments: 鈥淭his launch responds to strong client demand for a clearing solution to help improve the capital efficiencies associated with stock borrowing and lending activities 鈥� delivering significant benefits to all participants in this ecosystem, including asset owners which lend out inventory as a way of generating additional income for their members.鈥�
The new service is available to principal lenders, special participant lenders, and borrowers, with settlements conducted across 19 European central securities depositories (CSDs).
It utilises BNY and J.P. Morgan as triparty collateral agents, while Pirum serves as the transmitter of new trade instructions and post-trade lifecycle events on behalf of clients.
鈥淲e鈥檙e excited to provide clients with the option to clear securities lending transactions through Cboe鈥檚 new service while leveraging BNY鈥檚 global collateral platform to manage their liquidity and to access cleared and uncleared collateral markets globally,鈥� says Gesa Johannsen, executive platform owner of Global Collateral at BNY.
The service also provides margin and operational advantages within major cash equities clearing houses in Europe, the firm says.
These include savings from cross-margining between cash equities and SFTs, greater settlement efficiencies, elimination of agent lender disclosures, as well as improved practices around fees management and corporate actions.
In addition to the firms that have already used the service, several banks, asset managers, broker-dealers, and agent lenders have completed final testing in preparation for clearing.
Jan Treuren, SFT product lead at Cboe Clear Europe, adds: 鈥淲e expect activity to increase in the weeks and months ahead, with active onboarding and testing already underway with principal lenders, agent lenders acting on behalf of special participant lenders 鈥� including UCITS and non-UCITS beneficial owners 鈥� and the borrower community.鈥�
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