ISITC updates tri-party repo guidelines 12 September 2011Boston Reporter: Anna Reitman
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In response to guidelines issued by the New York Fed, the International Securities Association for Institutional Trade Communication (ISITC) released an updated Market Practice for tri-party reverse repurchase agreement settlement and confirmation.
“Part of our mission at ISITC is to respond to industry regulation and develop best practices for all market constituents,” said Erica Choinski, executive sponsor of the ISITC Settlements Working Group.
The reforms, some of which were implemented by August this year, introduce and strongly recommend the netting of tri-party reverse repo trades to reduce the number of intraday cash wires.
In a separate statement, J.P. Morgan announced that volumes and business have not been affected by reforms such as the move of the daily unwind to 3:30pm, which was mandated for 22 August by the New York Fed's Task Force.
“When we first learned of the [New York Fed] guidelines, we teamed up with the [Asset Managers Forum] to really understand how we could comply with the new reforms and bring a greater degree of automation to the netting process," said Choinski.
The Market Practice addresses the various netting scenarios presented by these guidelines, including single deal netting scenarios, multiple deal single broker netting scenarios, and multiple deal multiple broker netting scenarios.
The scope of the Market Practice document defines tri-party reverse repos and the business practices
between the investment manager, custodian bank, and/or accounting agent. ISITC is also currently
developing best practices for matching which will provide further direction for tri-party repo matching.
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