Eurex and Clearstream launch new basket to GC Pooling market

GC Pooling reached record results in 2008/
Central counterparty improves market liquidity and efficiency

Eurex and Clearstream have launched a new collateral basket (EXTended Basket)on the GC Pooling market, Eurex Repo’s secured money market segment. This new basket extends the trading possibilities for the 28 market participants already active in this market.

In 2008, GC Pooling’s volumes reached new records with a daily peak at EUR 61.4bn for average outstanding volume at the end of 2008. Overall volumes tripled in 2008 and totalled EUR 41.7 billion. GC Pooling offers a direct link to open market operations of the European Central Bank (ECB), as well as an integrated central clearing via Eurex Clearing which mitigates counterparty risks.

The EXTended Basket covers more than 23,000 eligible securities listed in the ECB’s Eligible Asset Database (EAD) that fulfil the risk management requirements of Eurex Clearing AG, the integrated central clearing counterparty. The EXTended Basket complements the Euro GC Pooling basket launched in September 2007 which is composed of 8,000 government or supranational backed securities. The EXTended Basket also includes corporate bonds accepted by the ECB but excludes Asset Backed Securities (ABS) and Mortgage Backed Securities (MBS).

Marcel Naas, Managing Director of Eurex Repo, said: “The latest addition of the EXTended Basket marks another major step to further increase market efficiency in collateralized funding. We aim to further expand by incorporating new baskets with additional segments and currencies. Market participants confirm the uniqueness of GC Pooling and its excellent performance during the turbulences in recent months.”

Stefan Lepp, member of the Clearstream Executive Board, outlines that the expansion is in line with the strong market trend towards trading platforms allowing for anonymous and reliable trading. “The advantages of the CCP combined with a unique service feature allowing the re-use of collateral also in the direction of the central bank to raise central bank money did lead to the drastic growth of GC Pooling over the last months. We intend to further build on this model as a key element of our proposition ‘Liquidity Hub Deutsche Börse Group’.”