The ICMA European Repo Council has signed a memorandum of understanding with Clearstream, Euroclear and Eurex Clearing, which engages those providers in a joint project focusing on increasing the efficiency of the repo market. Through this agreement Eurex Clearing will be able to extend the connected settlement locations for its secured market pooling with Clearstream to include Euroclear. The planned infrastructure should come to life by the end of 2015.
Setting up triparty settlement interoperability will improve the movement of collateral between the settlement locations in Europe and reduce collateral pool fragmentation, while allowing banks to supply liquidity to the market through the use of repo. The initiative will increase the efficiency of collateral management for repo basket trading throughout Europe and will boost the fluidity of collateral across the Euro zone.