Verdipapirsentralen ASA (VPS), the Norwegian central securities depository (CSD), and Clearstream, the post-trade services provider of Deutsche Börse Group, have signed a letter of intent aimed at developing new collateral management services for Norway. The new service will enable VPS to offer to Norwegian market participants the allocation, optimisation and substitution of collateral to cover domestic exposures. VPS would offer these services on a white-labelled basis via Clearstream’s fully automated real-time collateral management engine, the Global Liquidity Hub.

As a unique feature of the Liquidity Hub GO service, assets remain on accounts in the local market environment, thus not creating new systemic risks and meeting regulatory requirements in many domestic markets globally. Clearstream is the only collateral management services provider who is able to manage collateral across time zones and regions while the assets stay in the respective domestic market and under local legislation.

Going forward, the partnership between VPS and Clearstream will also help Norwegian financial institutions and VPS customers to overcome internal collateral fragmentation across systems. According to an end of 2011 estimate by Accenture, the financial services sector could save more than EUR 4 billion annually by addressing operational collateral management inefficiencies: decentralised operations and unaligned business objectives are limiting the ability of banks to manage collateral efficiently on a local and global basis. This shortfall can now also be addressed in Norway.

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