DTCC’s FICC and BNY Launch Collateral-in-Lieu Service

The Depository Trust & Clearing Corporation (DTCC), the market infrastructure for the global financial services industry, and BNY announced that DTCC’s Fixed Income Clearing Corporation (FICC) subsidiary has officially 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. successfully 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 typically 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 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.