TRADE & FINANCE 29
One of the most recent examples of innovative benchmarks is the STOXX GC Pooling index family that provides investors with a money market rate based on reliable market data
grown in recent years to a volume of up to 180 billion euros with on average 3,000 transactions on the platform. More than 120 market participants from 14 countries are connected to the platform. The secured money market is attracting volume from the unsecured money market as it addresses key concerns raised during the financial crisis. Firstly, trading on the GC Pooling market takes place via a central counterparty( CCP), i. e. each participant is only trading with the CCP, and thus counterparty risks that were one reason for the breakdown of interbank trading during the financial crisis are mitigated. Moreover, the CCP nets all positions in the settlement process and thus helps reduce transaction costs. The obligatory collateralization of each position that is centrally and automatically managed also reduces credit risks. There are three different baskets of securities eligible for collateralization, two of them reflecting requirements of the European Central Bank( ECB), which can also be used for refinancing directly with the central bank.
In late 2014, the first financial instruments based on the STOXX ® GC Pooling EUR Deferred Funding Rate will become available. A new futures contract listed on Eurex will support the risk management of banks and other market participants. This is a good example of how independent index providers can create innovative solutions, which meet high regulatory standards and investors needs in a business environment altered forever by the financial crisis. ■