The trade, conducted between Bank of America Merrill Lynch and ING Bank, with J.P. Morgan as collateral custodian, was executed using one of Collex’s 10 standardised baskets, which have been implemented across various triparty agents.
The transaction enabled the ColleX Trader to borrow a triparty basket of collateral and achieve 100 percent reuse, establishing the first loan of triparty collateral.
This transaction type will reduce collateral cost and settlement risk as the trade executed and settled within two hours on trade date.
Commenting on the transaction, Grant Davies, head of business development at ColleX, said: “The success of ColleX is being driven by a growing collateral market. More than $2.7 trillion of collateral is now managed by Europe, the Middle East and Africa triparty custodians with Seg IM, centrally cleared counterparty margin and collateralisation of credit lines increasing demand for efficient collateral solutions.”
“ColleX enables market participants to leverage triparty infrastructure, mobilise firm inventory and convert it into eligible collateral to meet these needs.”
Richard Pryce, ING’s co-head of global securities finance, added: “Given ING’s established reputation in securities financing and experience in triparty transactions for our clients, we see the benefits of electronic trading in terms of transparency and efficiency. We are pleased to be a part of this innovation.”