The London branch of a leading Japanese bank needed to optimise its JGBs to raise cash in USD.
Optimising JGBs and cutting risk
Optimise JGBs as collateral to raise USD cash or see its JPY-denominated collateral assets under-utilised.
Challenges associated to this activity were:
- settlement risk – differences in Japanese securities and US cash settlement cycles across timezones
- process and platform differences
Use Euroclear’s multi-currency Delivery-Versus-Payment (DVP) settlement capability to mitigate its JGB/USD cross-currency repo settlement risk.
Leverage our global infrastructure and local connections to settle JGBs against USD on a DVP basis.
Use Euroclear to effect internal settlement using an omnibus account.
The Japanese bank mitigated its settlement risk when optimising JGBs to raise USD cash. To do this it had to find the best place to settle JGB cross-currency repo transactions.