The Depository Trust & Clearing Corporation (DTCC), the market infrastructure for the financial services industry, and BNY (NYSE: BK), a global financial services company, announced that DTCC’s Fixed Income Clearing Corporation (FICC) subsidiary has launched its Collateral-in-Lieu (CIL) service under its Sponsored General Collateral (GC) offering via BNY’s Global Collateral Platform, with BNY Securities Finance and Federated Hermes, Inc. (NYSE: FHI) executing the first repo trade on the new solution.
The CIL service enhances FICC’s clearing model offerings “by delivering significant margin and capital efficiencies and will accelerate the market’s transition to central clearing under the Securities and Exchange Commission’s (SEC’s) U.S. Treasury clearing mandate.”
The service maintains the haircut “posted by dealers to money market funds and other cash investors in triparty while implementing a CCP lien that is applied “in lieu” of both a Sponsor guaranty and margin posting to the CCP (in most circumstances).”
This approach reportedly eliminates double-margining “for some Sponsored members and streamlines operational processes for market participants, leveraging the benefits of triparty.”
The service leverages BNY’s triparty infrastructure for collateral management and settlement, supporting both “done-away” and “done-with” trade execution styles.
DTCC expects increased adoption of the Collateral-in-Lieu service in the coming months as the industry prepares “for full implementation of the SEC’s clearing requirements at the end of 2026 and June 2027.”
With more than 50 years of industry experience, DTCC is the post-trade market infrastructure for the global financial services industry.
From 20 different locations around the world, DTCC, through its various subsidiaries, automates, centralizes, and “standardizes the processing of financial transactions, mitigating risk, increasing transparency, enhancing performance and driving efficiency for broker/dealers, custodian banks and asset managers.”
Industry-owned and governed, the firm notes that it innovates purposefully, simplifying the “complexities of clearing, settlement, asset servicing, transaction processing, trade reporting, and data services across asset classes, bringing enhanced resilience and soundness to existing financial markets while advancing the digital asset ecosystem.”
In 2024, DTCC’s subsidiaries processed securities transactions “valued at U.S. $3.7 quadrillion and its depository subsidiary provided custody and asset servicing for securities issues from over 150 countries and territories valued at U.S. $99 trillion.”
DTCC’s Global Trade Repository service, via its “locally registered, licensed, or approved trade repositories, processes more than 25 billion messages annually.”