Pan-European clearing house Cboe Clear Europe has announced that it is commencing the clearing of European securities financing transactions (SFTs). The firm claims that it is bringing a first-of-its-kind service to market that “transforms the bilateral process for SFTs in European equities and exchange traded funds (ETFs) into a centrally cleared model”.
According to Vikesh Patel, president of Cboe Clear Europe, the launch was a response to strong demand for “a clearing solution to help improve the capital efficiencies associated with stock borrowing and lending activities”. The firm states that this is “particularly important”, especially due to the “increased regulatory, capital and operational burdens associated with SFTs resulting from the Central Securities Depositories Regulation (CSDR), Securities Financing Transactions Regulation (SFTR), and planned Basel IV implementation.
The service conducts settlements across 19 European CSDs, using BNY and JP Morgan as tri-party collateral agents. Financial services technology vendor Pirum acts on behalf of clients as the transmitter of new trade instructions and post-trade lifecycle events.
Natixis CIB and JP Morgan were among the first participants to use the new service. A number of other organisations, including banks, asset managers, broker-dealers, and agent lenders, have also completed final testing in preparation for clearing.
Cboe’s SFT clearing initiative was first announced in mid-2023, at which point we did this interview with product development head Jan Treuren.
