DTCC introduce buy side participation in cleared repo market
31 January 2018 New York
Image: Shutterstock
The Depository Trust & Clearing Corporation (DTCC) have introduced buy side participation in the cleared repo market.
The move comes after State Street and The Trust Company, completed the first cleared sponsored repo transactions as a collateral provider.
According to DTCC, the introduction of buy side participation is a significant step in CCP clearing and brings greater risk mitigation to the repo market, and with the participation of the first collateral provider clients in the Sponsored DVP Repo Service, the buy side is fully represented in the clearinghouse.
Although DTCC’s subsidiary Fixed Income Clearing Corporation (FICC) has operated its sponsored DVP repo service since 2005, it only expanded participation in this service beyond registered investment companies (RICs) in May 2017.
According to DTCC, since then, this service has seen volumes double previous peak.
Murray Pozmanter, DTCC managing director and head of clearing agency services, said: “With the addition of institutional participation as collateral providers, we have achieved our goal of providing a true cleared repo solution for the buy side, lowering risk in the market.”
He added: “As more firms take advantage of the new repo clearing solution, fire-sale risk and price degradation are reduced as result of centralised liquidation services.”
Gino Timperio, senior vice president and head of funding and collateral transformation at State Street, commented: “We are excited to expand our partnership with DTCC. Through the sponsored service, our non-’40 Act clients will now benefit from the capacity and counterparty strength associated with a centrally cleared platform.”
The move comes after State Street and The Trust Company, completed the first cleared sponsored repo transactions as a collateral provider.
According to DTCC, the introduction of buy side participation is a significant step in CCP clearing and brings greater risk mitigation to the repo market, and with the participation of the first collateral provider clients in the Sponsored DVP Repo Service, the buy side is fully represented in the clearinghouse.
Although DTCC’s subsidiary Fixed Income Clearing Corporation (FICC) has operated its sponsored DVP repo service since 2005, it only expanded participation in this service beyond registered investment companies (RICs) in May 2017.
According to DTCC, since then, this service has seen volumes double previous peak.
Murray Pozmanter, DTCC managing director and head of clearing agency services, said: “With the addition of institutional participation as collateral providers, we have achieved our goal of providing a true cleared repo solution for the buy side, lowering risk in the market.”
He added: “As more firms take advantage of the new repo clearing solution, fire-sale risk and price degradation are reduced as result of centralised liquidation services.”
Gino Timperio, senior vice president and head of funding and collateral transformation at State Street, commented: “We are excited to expand our partnership with DTCC. Through the sponsored service, our non-’40 Act clients will now benefit from the capacity and counterparty strength associated with a centrally cleared platform.”
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