Frontclear issues Basel III compliant unfunded credit guarantees on financial institutions in emerging and frontier markets. The company participates in transactions in two primary structures: bilaterally in over-the-counter transactions and structurally through the provision of risk capital to infrastructure providers (such as CCPs and CSDs). The two models provide Frontclear with substantial flexibility to provide bespoke risk solutions according to market needs. The bilateral model seeks to trigger liquidity and inclusiveness in a simple structure whilst the plug-in model provides versatility to enable Frontclear to partner with a wide array of infrastructure providers to build stable and sustainable markets.
In both structures Frontclear is focused on absorbing financial risk whilst Beneficiaries or partners manage operational risk. The innovative proposal of Frontclear is the acceptance of local currency securities as collateral and the global diversification of collateral risk to facilitate lowest cost access to local and global financial markets.