Cboe Clear Europe secures additional support for launch of SFT clearing service

By Gloria Methri

Cboe Clear Europe, Cboe’s Amsterdam-based clearing house, has secured the support of additional participants for the launch of its Central Counterparty (CCP) clearing service for securities financing transactions (SFTs).

Bank of America and State Street have committed to supporting the service from launch, which is expected during Q3 2024, subject to regulatory approvals.

Their commitment brings the total number of launch participants for the SFT clearing service to nine, comprising a broad range of key market participants, including banks, clearing firms, asset managers and custodians.

Vikesh Patel, President of Cboe Clear Europe, said, “We are delighted to have added two major participants in the European securities lending industry to the group of firms supporting the launch of the SFT service and benefit from their collective expertise as we finalise our offering. Their recent commitment – and the calibre of the group of early adopters we have assembled as a whole – clearly demonstrates the growing need to introduce central clearing to the European SFT market and help reduce risk in this key activity. Cboe Clear Europe is uniquely positioned to provide this service. We couldn’t be more excited to bring our proven post-trade expertise to a new asset class with the support of our partners, delivering significant capital, operational and risk-mitigation efficiencies.”

Alessandro Cozzani, Managing Director, Bank of America, said, “We are excited to embark on this journey with Cboe Clear Europe. Developing a cleared product for securities lending is a natural evolution in our secured financing market, which should allow for greater risk optimisation with counterparties.”

By offering access to a CCP clearing and settlement service for SFTs, Cboe Clear Europe is expected to help clients address these new rules, reduce their risk-weighted asset exposures associated with bilateral SFTs, and support the growth of this vital market.

Jan Treuren, SFT Product Lead, Cboe Clear Europe, said, “The addition of Bank of America and State Street demonstrates the growing momentum behind our service as we approach its launch and our commitment to delivering innovative client-driven services. We are working closely with all of our launch participants to help shape the first phase of our SFT service offering through a series of regular working groups and key stakeholder meetings. This includes exploring the expansion of the service into other asset classes and jurisdictions. At launch, Cboe Clear Europe will be the only pan-European CCP offering these consolidated services for SFTs in European cash equities and ETFs.”