GC Interview: Euroclear's Gösta Feige, Director of Product Solutions, Collateral Management
By Janet Du Chenne
Last week Euroclear hired Gösta Feige as a director of product solutions, collateral management, joining from Clearstream. Global Custodian speaks to Feige on the move, and what he envisions for collateral management and future collaborations.
GC: What is the background of your move to Euroclear?
GF: For the last 12 years I have been with Deutsche Börse group, namely at Clearstream in Luxembourg, looking after clients in the role of Head of Sales and Relationship EMEA for collateral management.
I joined Euroclear recently as director of product solutions, collateral management. Reporting to Olivier de Schaetzen, I will help in the development of commercial sales and marketing in the areas of collateral management. There are about 70 relationship managers in the Commercial Division that support and drive client business on the Collateral Highway.
One major building block in moving this forward will be the DTCC-Euroclear Global Collateral Limited- focusing on collateral processing. It is an open architecture infrastructure that will provide collateral solutions for both derivatives and financing activity, delivering transparency, collateral mobility, efficiency and security through two powerful utilities: DTCC's Margin Transit Utility, which will enable straight-through processing of margin calls and Euroclear's Collateral Management Utility, which will address the global challenge of sub-optimal collateral allocation and mobility, through utilizing Euroclear's Collateral Highway.
GC: Corporates form a growing client segment. Why is this so?
GF: The corporate segment used to make up around 3 or 4% of our tri-party volumes. Post financial crisis, and this figure is now well over 10 % and growing. Corporates are increasingly entering triparty trading deals safe in the knowledge that they can leave the operational complexities of managing securities collateral management, like substitutions, margin calls, etc, to us. Our offering includes repo access under GMRA targeted to the corporate world. More can be done to attract cash-rich corporates to the triparty world. It is about creating awareness and building up the benefits, explaining to them that they can define their risk-versus-reward profile to the highest levels of granularity.
GC: Why is collaboration important and what is the end game?
GF: Current and pending regulations are bringing entities together to cooperate and provide collateral solutions on a global scale. Regulators want more diversified pools of lenders, not uniquely from the inter-bank markets. And here corporates are helping, but greater awareness building through collaboration would help even further.
Another example is securities lending. Post crisis, the need for high-grade securities to cover trading exposures remains vital. Tapping into securities lending liquidity, comings from central banks or others, is not the end game, but rather the essentials of day-to-day business. Our product GC Access is driven by central banks which lend through our SLB fails lending program, and now these central banks are looking for further distribution and diversification while keeping the same comfort level of safety. As an effect, we can now increase distribution to street borrowers which borrow those high grade papers.
For central banks, it is often about supporting them in keeping a highly risk-averse profile, also when lending securities. Besides knowing and trusting Euroclear as a counterpart, our GC Access collateral schedules fuel their need for safety by allocating high-grade collateral in their favor.
It’s also a scale game. Euroclear processes average daily collateral outstanding of close to EUR 900 billion worth of securities on the Collateral Highway. A figure that is likely to increase as we deliver on the DTCC JV and expand our Open Inventory Sourcing (OIS) service with key agent banks and also infrastructures. In a nutshell, all of our collaborative collateral initiatives are about breaking down silos within institutions, to make access to collateral safer, easier and more cost efficient, also across time zones.