Collateral management harmonisation
Part of the Eurosystem’s mandate is to foster European financial market integration and promote a truly domestic single market in Europe. Harmonised collateral management processes are a key prerequisite for achieving this. Yet, barriers and obstacles still exist on account of fragmented legacy standards, structural constraints and complex and diverse market practices.
What is SCoRE?
In order to address this fragmentation, the Eurosystem’s Advisory Group on Market Infrastructures for Securities and Collateral (AMI-SeCo) is working towards developing a Single Collateral Management Rulebook for Europe (SCoRE), which defines common rules for managing collateral.
The harmonised collateral management processes laid down in SCoRE will ultimately make it easier for:
- market participants to move their securities and collateral safely and efficiently between EU countries, without friction or restrictions;
- investors to buy securities in any EU country and use them as collateral in the same or any other EU country;
- banks to move collateral and securities quickly to where they are needed.
It will also lead to:
- increased efficiency, by enabling collateral management across Europe from a single account using the same procedures;
- lower costs, as a single rulebook will allow market participants to implement a single set of procedures;
- interoperability, resulting from common messaging based on a common set of data across financial market infrastructures;
- lower risk in managing securities and collateral as a result of the standardisation of processes;
- a level playing field for all market participants across Europe;
- increased reach beyond domestic markets.
What standards have been agreed?
Standards have already been agreed in three of these areas:
Triparty Collateral Management
A single triparty model for Europe with common processes for interaction between all major European triparty service providers and their participants, including the Eurosystem, using ISO 20022 messaging.Triparty Collateral Management: Single Collateral Management Rulebook for Europe
A single set of rules for the transmission of billing information by post-trade service providers related to custody and collateral management, including the alignment of billing frequency and dates and using ISO 20022 messaging.Billing Processes: Single Collateral Management Rulebook for Europe
A first set of harmonised business processes and workflows for debt instruments, foreseeing the use of ISO 20022 messaging. Work on other instruments, such as equities, is ongoing.Corporate Actions: Single Collateral Management Rulebook for Europe
The AMI-SeCo has also defined a framework for monitoring the implementation of the standards. Work to define standards in the remaining areas is ongoing.
Find out more about related content
The Collateral Management Harmonisation Task Force (CMH-TF)
The CMH-TF supports the work of the AMI-SeCo Harmonisation Steering Group (HSG) and AMI-SeCo.read more