Cboe Clear Europe will soon offer securities financing transactions (SFT) clearing to fixed income instruments, expanding its SFT central clearing capabilities.
From 24 August, users will be able to settle EU, Swiss and UK corporate and government bonds through the platform. EU and Swiss instruments will be cleared through Euroclear Bank, while CREST will clear UK instruments.
US Treasuries and corporate bonds will also be eligible for non-US lenders and borrowers, and cleared by the Federal Reserve and the Depositary Trust Corporation respectively.
Using a central clearing model for SFT will allow users to improve their balance sheet efficiencies, Cboe says.
Cboe Clear Europe launched its SFT clearing service last year, covering European cash equities and ETFs across 19 CSDs. Since going live, the firm reports, daily notional outstanding loan values have been €9 billion.
READ MORE: Cboe resurrects European central SFT clearing
To date, central SFT clearing has been left behind in Europe; Eurex shuttered its European securities lending CCP in 2021, eight years after launch.
Most securities financing transactions are bilateral and not centrally cleared. According to a Risky Finance study, at the end of 2023, the largest ten global banks reported a total $500 billion of SFT exposure.
Jan Treuren, head of product at Cboe Clear Europe, commented, “Participant appetite for a single, globally consistent clearing framework for securities lending continues to grow as demonstrated by increased use rates for lenders.”
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