With this direct clearing connection, Eurex addresses repo market liquidity concerns as well as the regulatory-driven challenges of asset owners, in particular pension funds. The European Markets Infrastructure Regulation (EMIR) requires over-the-counter derivatives to be cleared through central clearing counterparties. Pension funds have been exempted as the requirement of CCPs to post Variation Margin in cash might pose liquidity challenges.
Using Eurex Repo’s centrally cleared, liquid repo markets, PGGM’s clients can trade with more than 140 Eurex participants including commercial banks, central banks, government financing agencies or supranationals. They are able to invest cash securely or raise short-term funding reliably utilising more than 13,000 ISINs. In this way, PGGM expands its spectrum of available liquidity providers significantly, minimizes counterparty risk, and reduces costs. PGGM utilises SimCorp Dimension to process all Eurex repo trades and support the margin process.
In particular, Eurex Repo’s integrated GC Pooling repo market with straight-through processing across trading (Eurex Repo), central clearing (Eurex Clearing) and Tri-party settlement (Clearstream) allows for an operationally robust and secure management of cash variation and initial margin requirements.
Paul van de Moosdijk, Investment Manager at PGGM: “PGGM continues to voice concerns about the adverse effect that cash variation margin requirement has on pension funds. Through Eurex Repo’s offering PGGM is enhancing its access to cash liquidity and market infrastructure to further address these concerns.”
Societe Generale Prime Services acts as a clearing agent for PGGM. Frederic Colette, Global Head of Prime Brokerage & Clearing: ”We believe that the central clearing of repos via ISA Direct is very compelling for both the buy side as well as Societe Generale as clearing agent and execution counterpart. It allows our clients to get a direct connection to the cleared repo market on Eurex for the first time, securing access to a large liquidity pool through a streamlined process at a very competitive price.”
Eurex Clearing’s ISA Direct Model is currently offered for repos as well as OTC IRS. Matthias Graulich, Global Head of Fixed Income, Funding and Financing Strategy and Development at Deutsche Börse Group: “The successful onboarding of PGGM validates our efforts to open up the centrally cleared repo market to the buy side. We anticipate that other pension funds and buy-side entities with large directional derivatives portfolios will appreciate the significant benefits of combining centrally cleared repos with OTC IRS under ISA Direct in the near future.”
About Eurex Clearing:
Eurex Clearing is one of the leading central counterparties globally — assuring the safety and integrity of markets while providing innovation in risk management, clearing technology and client asset protection. Eurex Clearing serves about 200 Clearing Members in 20 countries, managing a collateral pool of EUR 46 billion and clearing trades valued at EUR 23 trillion (double counted) every month.
PGGM is a cooperative Dutch pension fund service provider. Institutional clients are offered: asset management, pension fund management, policy advice and management support. On December 31, 2018 PGGM had EUR 211 billion in assets under management and was administrating pensions of 4.4 million participants. Around 750,000 workers in the Dutch healthcare are connected to PGGM&CO, our members organization. Either alone or together with strategic partners, PGGM develops future solutions by linking together pension, care, housing and work.
About Societe Generale Prime Services:
Societe Generale Prime Services (“SG Prime Services”) is part of the Global Markets’ division of Societe Generale Corporate & Investment Banking. SG Prime Services is the bank’s prime brokerage business, offering a unique combination of execution, clearing, custody and financing services. It is truly multi-asset and multi-instrument across Listed Derivatives, Equities (Cash/synthetic), FX, Fixed Income and OTC Cleared products. As a firm offering world leading derivatives brokerage services, unrivalled access to 130+ markets and exchange venues, Societe Generale Prime Services provides its clients an extensive pool of liquidity and tailored value added services.
SimCorp provides integrated, best-in-class investment management solutions to the world's leading asset managers, fund managers, asset servicers, pension and insurance funds, wealth managers, and sovereign wealth funds. Whether deployed on premise or as a service, its core system, SimpCorp Dimension®, supports the entire investment value chain and range of instruments, all based on a market-leading IBOR. SimCorp invests more approximately 20% of its annual revenue in R&D, helping clients develop their business and stay ahead of ever-changing industry demands. Listed on NASDAQ Copenhagen, SimCorp is a global company, regionally covering all of Europe, North America, and Asia Pacific.