Stock exchanges in collateral and liquidity alliance

FRANKFURT Wed Jan 16, 2013 4:08am EST

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FRANKFURT Jan 16 (Reuters) - Five stock exchanges are setting up a cooperation to improve collateral management and liquidity services to customers, allowing them to offer collateral in one country via assets held in other jurisdictions or currency areas.

Luxembourg-based Clearstream, Spain's Iberclear, Australia's ASX, Brazil's Cetip and South Africa's Strate will be initial members of the Liquidity Alliance, the bourses said in a joint statement on Wednesday.

It is open for new members to join.

"Optimising collateral means creating and utilising the widest possible collateral pools without jeopardising individual and country specific requirements," Clearstream Stefan Lepp said.

The global movement of banks' collateral is often hampered by regulatory requirements to manage assets under local laws or in local currency, and not to transfer them overseas.

The situation has worsened since the euro zone crisis knocked money markets, curtailing unsecured lending. At the same time, new regulation forces banks to hold more liquidity. (Reporting by Arno Schuetze)

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