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BNP Paribas Securities Services is the world`s only custodian with a triparty service financed directly by the client`s current account. Too often, the customer has to manage an additional account (called “Longbox”) that reduces the benefits of the Triparty model. In a “Longbox” configuration, the customer must pre-select the securities to be transferred to the “Longbox”, recall surplus securities to the main account, coordinate their positions on multiple accounts, etc. As with over-the-counter derivatives, Triparty platforms are well placed: the Triparty model is ideal for managing warranty shares. However, this solution is only viable for the buy-side if different criteria are met: after receiving the RQV, the custodian checks the existing balance of the separate account, looks in the long box of the pawnbroker to see the available securities and determine which securities can be pledged in the long box field for this agreement before calculating the amount of guarantee to be moved to achieve the necessary balance. In other words, when companies use a third-party custodian, they are responsible for calculating the amount of additional collateral required, selecting an asset, verifying the eligibility of security, applying discounts, assessing security, optimizing, managing substitutions and ensuring settlement instruction to the custodian. This is the same process that would be used to post titles if the guarantees are not separated. Third-party structures are generally less expensive because they require customers to “have” more operational workflows for security selection and billing. Under the third-party structure, companies and their counterparties must first agree on the amount of the im-call, and then the security to be mortgaged, before ordering the depository to settle. Tripartite structures are generally more expensive than foreign structures. This is because the administrator offers a wider range of services in the Triparty model and supports more operating processes on behalf of the client.

Customers must each hold a “long check” of potential security with the triparty custodian. After approval of the im-margin calls, each party is obliged to order the custodian of the RQV (guarantee balance required). This runs counter to the traditional management of VMs, in which each party will also grant the guarantees to be pledged before hiring the custodian. A tripartite construction credit contract generally lists the rights and remedies of the three parties from the perspective of the borrower, lender and contractor.