Trésorier magazine - n°78 - 2ème trimestre 2012 - (Page 9)

Interview with Mr. Ulf Bacher, Co Head of Agency Cash Management at Newedge and Mr. Thomas Gerke, Senior Group Treasury Manager at K+S AG These days (bank) counterparty risk is and remains high for Corporate Treasurers. We thought it could be of interest to question two specialists on Triparty repo: Mr. UlF Bacher has launched a FSA regulated triparty repo platform with Newedge UK and MTS while Mr. Thomas Gerke in the last years has been looking for alternative for investments of excess liquidity at K+S Group level. Do you think Triparty repo could be a solution to diversify placements and mitigate risks? Yes, without a doubt. Repo is a secured money market instrument where the cash investor receives extra protection through the ownership of collateral in the form of securities.The secured protection provided with the collateral is superior to investing cash in an unsecured Money Market instrument. Triparty Repo is a perfect solution for Corporate Treasurers as the collateral management is outsourced to a specialist regulated entity who handles DVP settlement, Margin calls, Collateral quality checks and any other concentration limits set by the cash investor. What are the hurdles corporates should anticipate before entering into tri-party repo agreement? The two main hurdles to accessing the tri-party repo market are selecting a Tri Party Agent (TPA) and completing the required legal documentation process between the TPA the cash investor and the cash borrower. In Europe there are 4 significant TPAs, Bank of New York Mellon, JP Morgan Chase, Clearstream and Euroclear.You can have relationships with just one TPA or all 4 TPAs. All TPAs have different strengths in customer base and collateral connectivity. We recommend having at least 2 TPAs but you must have at least one relationship. As the repo product provides the cash investor with an extra level of protection it’s similar to signing an insurance contract. This contract requires legal review and takes time. The good news is that this legal hurdle is one off. Once it is done, it’s all about the cash investment. The repo market uses standardized Repo legal agreements, General Master Repurchase Agreements (GMRA), which shortens the timeframe a little, but the detailed bilateral credit negotiation between the cash investor and the collateral provider requires legal resources. The negotiation of the GMRA is a cost to the corporate but the TPA fees are paid for by the collateral provider. The time and effort required to complete the documentation process far outweighs the risks of remaining in the unsecured markets. Downloading the ACM platform is free and easy. We will assist the clients in every step. Any piece of advice you could give to our corporate readers before contemplating such products? Don’t be put off by the paperwork! We see many clients appointing pro- 8 INTERVIEW 9

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

EDITORIAL - 2012, l’année des réglementations?
INTERVIEW - Mr. Ulf Bacher & Mr.Thomas Gerke

Trésorier magazine - n°78 - 2ème trimestre 2012