Wagner Anacleto - Cetip - Summit 2012x - Clearstream
Wagner Anacleto - Cetip - Summit 2012x - Clearstream
Wagner Anacleto - Cetip - Summit 2012x - Clearstream
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<strong>Cetip</strong> overview<br />
• CSD -largest of<br />
Latin America with<br />
USD 1.8 trillion AUC<br />
•Trade Repository for<br />
OTC Derivatives<br />
with notional of<br />
USD 300 billion<br />
• Risk Mitigation tools:<br />
Triparty Collateral<br />
Management for<br />
bilateral deals and<br />
Calculation Agent<br />
Vertically Integrated Business Model<br />
•Centralised<br />
Settlement<br />
Processing<br />
•More than 120.000<br />
transactions daily.<br />
• Fixed Income<br />
Electronic Trading<br />
Platform
OTC Derivatives Market in Brazil<br />
<strong>Cetip</strong> HISTORICAL DATA OF OTC DERIVATIVES MARKET –Notional Outstanding Amounts -U$ Billion<br />
US$ Billion<br />
350<br />
300<br />
250<br />
200<br />
150<br />
100<br />
50<br />
-<br />
89 82<br />
102<br />
77 81 69<br />
100<br />
132<br />
201<br />
222<br />
187<br />
238 230 228 240 237<br />
IRS CCY Other<br />
255<br />
277 278<br />
309 316 328 327<br />
293
Key principles of the G20 commitments<br />
Increasetransparency<br />
Reduce Counterparty risk<br />
By end 2012<br />
Trade Repositories<br />
Reporting to regulators<br />
Strengthen bilateral risk management<br />
Standardizedcontracts -CCP<br />
Higher capital requirement
Pioneering solution - registration<br />
Mandatory<br />
Registration<br />
Centralised<br />
Transparent<br />
Brazilian OTC<br />
First regulationissued in 1994<br />
OTC transactions must be registered in a<br />
centralised system approved by the Brazilian<br />
Securities Commission and the Central Bank of<br />
Brazil<br />
Mandatory identification of the beneficiary owner<br />
Registration through a centralised electronic<br />
system by the authorised participants<br />
SRO Role: The OTC Clearinghouse are responsible<br />
for analysing and approving of the transactions<br />
submitted to registration and trading
Trade Repository Services<br />
Mandatory<br />
Registration<br />
Centralised<br />
Transparent<br />
Brazilian OTC<br />
First regulationissued in 1994<br />
And it goes beyond Registration, to clearing and<br />
settlement:<br />
All trades intermediated by Financial Institutions<br />
are matched electronically and settled via <strong>Cetip</strong><br />
with Central Bank reserves.<br />
Regulators receive in a daily bases reports and<br />
files with all the information about the OTC<br />
derivatives registeredat CETIP.
CETIPCOLateral<br />
CETIPCOLateral<br />
A new services dimension<br />
A new services dimension
Use of collateral<br />
comparing Brazil to other markets<br />
Growth in collateralised exposures<br />
0,7%<br />
(As percent of total exposure)<br />
Pioneering solution – calculation agent<br />
Calculation<br />
Agent<br />
Mandatory<br />
Registration<br />
Centralised<br />
Transparent<br />
Brazilian OTC<br />
Collateral<br />
Management<br />
CETIP hired Algorithmics to support their MtM<br />
calculation.<br />
CalculationAgent:<br />
In June 2010 <strong>Cetip</strong> starts to act as Calculation Agent<br />
withAlgorithmics system.<br />
Availability of files and reports, often daily, containing<br />
the value of transactions recorded exposures
Pioneering solution – Collateral Management<br />
Calculation<br />
Agent<br />
Mandatory<br />
Registration<br />
Centralised<br />
Transparent<br />
Brazilian OTC<br />
Collateral<br />
Management<br />
<strong>Cetip</strong> and <strong>Clearstream</strong> cooperate in the area of collateral<br />
management for the benefit of the Brazilian market and<br />
its Participants<br />
The cooperation is guided by feedback received from<br />
market participants and counts with formal approval by<br />
the CVM and the Central Bank<br />
Roll-out of the services will take place step by step in<br />
project phases.<br />
Phase I: Implemented in 18 th July 2011.<br />
• Collateralisation of OTC derivative exposures<br />
• <strong>Cetip</strong> exposure calculation as optional feature<br />
• Brazilian Corporate Bonds and Brazilian Government<br />
Securities eligible as collateral<br />
• Collateral management functions powered<br />
by <strong>Clearstream</strong><br />
• Collateral movements will only occur<br />
domestically, i.e. in the Brazilian jurisdiction<br />
• New customer web based interface
Pioneering solution – Collateral Management<br />
Calculation<br />
Agent<br />
Mandatory<br />
Registration<br />
Centralised<br />
Transparent<br />
Brazilian OTC<br />
Collateral<br />
Management<br />
<strong>Cetip</strong> and <strong>Clearstream</strong> cooperate in the area of collateral<br />
management for the benefit of the Brazilian market and<br />
its Participants<br />
The cooperation is guided by feedback received from<br />
market participants and counts with formal approval by<br />
the CVM and the Central Bank<br />
Roll-out of the services will take place step by step in<br />
project phases.<br />
Phase II:<br />
• Main feature: International Securities held at<br />
<strong>Clearstream</strong> become also eligible as collateral. Collateral<br />
Pool will consist of International Securities and Brazilian<br />
Securities
Collateral Management Services<br />
Participant A<br />
(<strong>Cetip</strong>)<br />
•EligibilityCheck<br />
•Securities Valuation<br />
•Automatic Allocation<br />
Exposure<br />
Notification<br />
Exposure<br />
Notification<br />
TripartyCollateralManagement<br />
OTC Derivatives Trades<br />
•Automatic Margin Calls<br />
•Substitution Process<br />
•Reporting<br />
Exposure<br />
Notification<br />
Collateral<br />
Transfer<br />
Instruction<br />
CETIP & SELIC<br />
Participant B<br />
(<strong>Cetip</strong>)<br />
•Immobilization of Domestic Assets<br />
Real case of Interoperability of CSDs
How it works - CETIPCOLateral
<strong>Cetip</strong> - <strong>Clearstream</strong><br />
…how to transform a challenge into a success!<br />
Build an early<br />
& STRONG<br />
TEAM SPIRIT<br />
Work towards<br />
a COMMON<br />
OBJECTIVE<br />
Identify and<br />
shape key<br />
success factors
E-learning<br />
<strong>Cetip</strong> offers to its participants an e-learning tool to access the description and<br />
functionalities of the CETIPCOLateral.
Questions?
<strong>Wagner</strong> <strong>Anacleto</strong><br />
wagneranacleto@cetip.com.br
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