TMX Group, which operates several Canadian post-trade infrastructure firms and the Toronto Stock Exchange, has launched the Canadian Collateral Management Service (CCMS) in partnership with Clearstream. BMO, CIBC, RBC, Scotiabank and TD have conducted the first trades through the service.
CCMS automates the end-to-end lifecycle of a repo trade, which the companies say will democratise the market and optimise collateral, and provides domestic tri-party repo capabilities.
By facilitating the optimisation and collateralisation of securities finance activities in the Canadian market, the service aims to help users overcome legacy technical problems and operational limitations.
A number of regulatory changes have driven the development of the service. From 28 June, the Canadian Dollar Offer Rate (CDOR) will cease and Banker’s Acceptances (BAs) will disappear. As such, market participants need an investment alternative – such as tri-party repo – to identify liquidity and manage risk exposure, the firms explained.
The service also provides a collateral management platform compatible within a T+1 settlement environment, in advance of the 27 May go-live.
Steve Everett, head of post-trade innovation at TMX Group, said: “Through this collaboration with Clearstream, TMX Group demonstrates its commitment to deliver innovative, market-driven solutions. The CCMS will enhance our clients’ capacity to adapt to the ever-changing collateral demands of modern markets while facilitating the expansion of repos as a viable investment avenue for both Canadian buy- and sell-side participants. As the Canadian market moves towards T+1, CCMS will also play a pivotal role in supporting this critical transition.”
Harri Vikstedt, senior policy director at the Bank of Canada and co-chair of the Canadian Infrastructure and Market Practices Advisory Group (CIMPA), added: “The introduction of CCMS will promote a well-functioning money market and modernise the Canadian repo landscape. It will help the development of an active two-sided term repo market which will support liquidity in cash products.”
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