Clearstream Launches OSCAR to Automate Collateral Management

Clearstream, one of the world’s largest settlement and custody firms for domestic and international securities, has launched its own collateral management tool.

The tool is called the Own Selection Criteria with Automated Reasoning (OSCAR).

Clearstream, a subsidiary of the Deutsche Börse Group, announced the launch of OSCAR on Wednesday.

According to the Luxembourg-headquartered international central securities depository (ICSD), the tool was developed in collaboration with Intelli-Select, a Brussels-based fintech company.

KU Leuven, a Catholic research university in Belgium, is also a collaborator for the tool’s development.

Clearstream said OSCAR is the first collateral management tool in the market that uniquely combines several artificial intelligence techniques.

These techniques include knowledge representation and reasoning, machine learning and natural language processing.

By the fourth quarter of this year, the custody firm explained, OSCAR will enable market participants to easily define, create, negotiate and exchange optimized eligibility profiles of collateral baskets.

‘From Weeks to Hours’

Clearstream explained that creating and managing collateral baskets have been complex and time consuming.

The ICSD added that this has created a major operation burden on market participants.

“They have had to manually review, compare and translate different profiles of multiple triparty agents while keeping up with changing business requirements, market conditions and regulatory requirements, such as Uncleared Margin Requirements (UMR),” the ICSD explained.

However, Samuel Riley, Clearstream’s Head of Investor Services & Financing, said OSCAR can cut down the time required to set up and negotiate a collateral bank from weeks to hours.

“Like this, Clearstream provides an enormous relief for client operations who can create individual, yet machine-readable collateral baskets to maximise the value of their business’s collateral,” Riley added.

Clearstream also said OSCAR can support users in defining their own intelligent eligibility criteria while also checking automatically for inconsistencies at the same time.

“The tool also ensures interoperability with different counterparts, improving collaboration, negotiation and reconciliation,” Clearstream said.

“This increases flexibility, scalability and speed while maximising operational efficiency,” the post-trade infrastructure provider added.

Bart Coppens, the Co-Founder & CEO of Intelli-Select, noted that OSCAR enables “the the creation of sophisticated insights with full explainability of the reasoning process yet based on intuitive natural language inputs.”

Meanwhile, Clearstream recently partnered with FNZ, one of the leading international wealth management platforms.

The collaboration was geared at enhancing transparency across the UK and European asset management industry.