Trésorier magazine - n°78 - 2ème trimestre 2012 - (Page 14)

been primarily confined to the banking world. In the last 20 years, the European market in triparty repos has built up to more than EUR 1 trillion per year. Now we are introducing our corporate customers to the benefits of triparty repo and we are able to act as a guide to those who are completely new to this facility. A major advantage of working with a triparty repo agent is that we can take care of our client through the complete process. Clearstream, carries out all the administration for the deal and acts on behalf of the two counterparties. The agent stays neutral in the transaction and performs the operations, an important factor in maintaining complete transparency and security in the transaction. In return for the cash, the cash provider typically receives equities or bonds as collateral.The value of this collateral fluctuates thereby necessitating daily mark-to-market calculations which result in daily margin calls. These are carried out by the triparty agent. Figure1: The triparty repo model FOCUS king” you with an appropriate counterparty through all the administration. Basically, once the paperwork is done, you can start. Triparty repos require bilateral legal agreements between the two counterparties but it is possible to minimise the legal work by using a standard legal agreement, the Global Master Repurchase Agreement (GMRA). This is written under English law and is recognised worldwide. Once you have your counterparty and the agreement is in place, you negotiate your trade as with any other plain vanilla time deposit. The counterparties agree terms on the amount of cash to be lent, the rate, the securities basket and the duration. It is at this stage that the trade is notified to the triparty agent which can begin all the necessary back-office work such as ensuring the delivery, custody, valuation and margin calls and substitutions plus any corporate actions. At Clearstream, we ensure that our customers can always see the realtime status of their transaction, including the up-to-date collateral portfolio, via our CreationOnline reporting system. The collateral is held in a segregated account in the name of the cash provider at Clearstream until the cash is repaid. Clear reporting is an important element for our customers who appreciate complete transaction transparency. HOW DOES REPO WORK? Repo – an abbreviation of “repurchase” – is the sale of securities with an agreement for the seller to buy back the securities at a later date. The large majority of repos take place on a fixed-term basis with the term lasting from overnight to any future maturity date. Open trades are also available and can be closed at any time. Evergreens and variable rate are also used more often these days. An important feature of repo is that during the transaction period, the collateral receiver (that is, the cash provider) is able to re-use the securities they have received as their effective owner. This means the corporate treasurer can lend out the securities to generate further revenues or can use them to cover other types of exposures. Additionally, the cash provider will be paid an agreed interest rate on the amount at the end of the term. The repo becomes “triparty” when a third party agent, such as If the collateral needs to be substituted, this is carried out automatically by the triparty agent, ensuring you do not have to deal with burdensome administration. At the end of the term, the triparty agent does everything necessary to close out the deal. TRANSPARENCY MEANS GREATER CONTROL We understand that a great number of corporate treasurers are interested in engaging in triparty repos but many are unsure how to begin. Using a triparty agent, makes it easy as we can help you through the entire process from “marriage-bro- 14

Table des matières de la publication Trésorier magazine - n°78 - 2ème trimestre 2012

SOMMAIRE
EDITORIAL - 2012, l’année des réglementations?
6 FINANCIAL HIGHLIGHTS
INTERVIEW - Mr. Ulf Bacher & Mr.Thomas Gerke
FOCUS
FORUM OF ADVERTISERS
CORPORATE FINANCE
TREASURERS’ ASSOCIATIONS
NEWS

Trésorier magazine - n°78 - 2ème trimestre 2012