As banks are generally tethered to the use of outsourced clearing house services to ensure there’s no risk of cheque or card fraud between buyers and sellers, the CBA’s partnership with a European institution is significant – basically a first for LCH, which has been eager to expand its network and clientele beyond its geographical borders.
Although the nature of the partnership is presently unclear and CBA has yet to reveal what it hopes to achieve from the partnership, or what it really means for its own large pool of Australian customers and corporate clientele, LCH has promised a high level of access to its wide range of corporate resources.
As stated by LCH, the membership of its RepoClear SA service provides access to the largest European denominated pool of cleared repos, significant capital and operational efficiencies, including balance sheet netting and intra-day liquidity management.
The perks don’t end there.
According to LCH, as a new member, “CBA is now able to benefit from the deep, stable and fast-growing pool of cleared euro-denominated repos offered by RepoClear SA across 13 markets”.
CBA is already a member of the Australian Payments Clearing Association (APCA), adhering to the clearing and settlement policies and procedures mandated by that organisation – otherwise known as the Australian Payments Network (AusPayNet), a self-regulatory body established by the payments industry to ensure the integrity of payment systems within Australia.
RepoClear SA’s head Corentine Poilvet-Clediere welcomed the partnership as a “milestone” for CBA being the first Australian member of LCH SA.
“RepoClear SA has been gaining increasing traction in regions outside Europe, with members joining from Japan, Canada and now Australia,” Ms Poilvet-Clediere said.
She cited the CBA as playing a key role in further deepening and enriching LCH’s netting pool.
CBA executive general manager of global markets, Chris McLachlan said the service’s 13 euro-denominated debt markets and recently expanded access for the buy-side, offers vital access to secured funding markets for CBA and its clients, as well as offering significant opportunities for capital and operational efficiencies.
The CBA also cited RepoClear SA’s significant 2021 growth in volumes and membership with a record €195 trillion of nominal cleared across 9.4 million trades, “representing increases of 15 per cent and 29 per cent respectively”
With the addition of CBA, RepoClear SA now counts 97 members, with a growing proportion of banks from outside Europe joining the service.
