A new service allowing firms to marshal US securities to use
as collateral in Europe has been launched by two of the
world’s largest central securities depositories
DTCC and Euroclear announced on Wednesday that the tool,
dubbed Inventory Management Service (IMS), is now
The platform, part of the pair's joint venture
GlobalCollateral, aims to deliver cross-border collateral
Shifting collateral across time zones and markets is often a
time consuming and costly process.
Other CSDs, including Euroclear's rival Clearstream,
are working on blockchain solutions to ease cross-border
The introduction of IMS also comes amid rising demand for
high-quality securities to back trades.
Both Euroclear and DTCC described the deployment of the
service as a "major step" towards creating global collateral
They added that IMS will help to alleviate the liquidity,
regulatory and risk challenges that the industry has been
Higher margin requirements on derivatives trades, for
example, are magnifying the focus on whether counterparties
have sufficient collateral available.
With IMS, firms can use Depository Trust Company (DTC)
eligible securities in the US, including equities, corporate
bonds and asset backed securities, for collateral purposes
"This is a major step for GlobalCollateral," said Michael
Shipton, chief executive of GlobalCollateral.
"IMS delivers one of the joint venture’s key
objectives – to address what market practitioners have
long recognised as a critical need to be able to directly
mobilize and use collateral across borders and to move dollar
assets into Europe.
"With IMS, firms have greater control and flexibility in the
way they utilize their assets, while benefiting from improved
In December, US regulator the SEC approved Euroclear's
application to begin to provide limited clearing services for
The CSD has acted as a clearing agency for US government
securities since 1998.