As of mid-June APG Asset Management, the Dutch pension asset manager, will start using clearing house Eurex to clear repo transactions, following similar moves by fellow pension asset managers PGGM and MN.
The switch to central clearing comes as the European pension sector is gearing up for an obligation to clear their over-the-counter derivatives transactions by 19 June 2023.
Fellow Dutch pension asset managers PGGM (2019) and MN (2021) already made the switch to central clearing.
Jan-Mark van Mill, head of treasury and trading at APG, said: “The direct link to Eurex’s cleared repo markets is an important enhancement of our collateral and cash management capabilities. Thanks to Eurex’s ISA Direct clearing service, our clients are better prepared for the potentially upcoming derivatives clearing obligation for pension funds.”
APG will not immediately clear all its repo transactions centrally via Eurex, according to a spokesperson.
“The amounts of transactions that will be led via Eurex’s clearing system will depend on supply and demand in the market,” he said.
Through Eurex’s deep liquid and centrally cleared repo markets, APG’s clients can now trade repos with over 150 participants registered with Eurex Repo, including commercial banks, supra nationals, central banks, and government financing agencies.
APG is thus significantly expanding its spectrum of available liquidity providers while minimising counterparty risk and reducing costs.