- Bank of America and State Street to support launch of Cboe Clear Europe’s clearing service for
securities financing transactions
- Brings total number of launch participants to nine, comprising a broad range of key market participants,
including banks, clearing firms, asset managers and custodians
- Launch on track for Q3 2024, subject to regulatory approvals
AMSTERDAM and LONDON – 4th April, 2024 – Cboe Clear
Europe, Cboe’s Amsterdam-based pan-European clearing house, today announced that it has secured the
support of additional participants to support 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. This
includes:
- Borrower Participants: ABN AMRO Clearing Bank, Bank of America, Barclays, Citibank, Goldman Sachs and J.P.
Morgan
- Agent Lender Participants: BNY Mellon, Citibank and State Street
Vikesh Patel, President, 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 and 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.”
As previously announced, this new service is expected to introduce matching, CCP clearing, settlement and post-trade
lifecycle management for SFT transactions in European cash equities and ETFs. Subject to regulatory approval,
the service will be available to principal lenders, special participant lenders (UCITS and non-UCITS) and
borrowers, with settlement taking place in 19 European Central Securities Depositories (CSDs) with non-cash RQV
managed at 2 Tri-Party Collateral Agents and cash RQV via cash correspondent banks. Because European SFTs
primarily occur on a bilateral basis and are not cleared, the products face significantly increased
capital demands and credit risk limitations as a result of new regulations including the implementation of the
Basel III endgame and Basel IV frameworks through the Capital Requirements Regulation (CRR) and Capital
Requirements Directive (CRD). The impact of such regulations may lead to a reduced capacity and appetite to
borrow or lend.
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 assets exposures associated with bilateral SFTs and
help support the growth of this vital market. The service is expected to also bring significant operational
advantages including greater settlement efficiency leading to a reduction in fail fines, elimination of agent
lender disclosures, and improved practices around fees management, corporate actions, and post-trade lifecycle
processing.
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 expansion of the service into other assets 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.”
**
About Cboe Clear Europe
As a leading pan-European equities clearing house, Cboe Clear Europe already currently offers clearing services for
cash equities to 47 trading venues. The company enables Clearing Participants to manage their counterparty
credit risk and also to maximise operational efficiencies through automated processing and the provision of
netting opportunities. It diversified into equity derivatives clearing in 2021 to support the launch of CEDX,
Cboe's pan-European equity derivatives exchange.
Cboe Clear Europe operates as an independent subsidiary of the Cboe group, retaining a separate governance structure
and management team. It is headquartered in Amsterdam and regulated by De Nederlandsche Bank and by Autoriteit
Financiële Markten. Further information on the company and its services can be found here:
clear.cboe.com/europe
**
About Cboe Global Markets
Cboe Global Markets (Cboe: CBOE), the world's leading derivatives and securities exchange network, delivers
cutting-edge trading, clearing and investment solutions to people around the world. Cboe provides trading
solutions and products in multiple asset classes, including equities, derivatives, FX, and digital assets,
across North America, Europe and Asia Pacific. Above all, we are committed to building a trusted, inclusive
global marketplace that enables people to pursue a sustainable financial future. To learn more about the
Exchange for the World Stage, visit www.cboe.com.
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