New Repo Trading Service Launches to Streamline Collateral and Compliance
A new service for repo trading has gone live, marking a significant shift in how firms handle collateral. The first trade using the Collateral-in-Lieu (CIL) service was completed on 29 October 2024, with State Street Global Advisors leading the way. The system, developed by DTCC’s Fixed Income Clearing Corporation (FICC) and powered by BNY’s infrastructure, aims to simplify clearing and improve market efficiency.
The inaugural repo trade on FICC’s CIL service involved BNY Securities Finance and Federated Hermes, Inc. The platform uses BNY’s triparty framework to manage collateral and settlements, ensuring smoother transactions. It also aligns with the SEC’s U.S. Treasury clearing rule, helping firms meet regulatory demands while boosting liquidity.
Industry leaders have highlighted the service’s benefits. Nehal Udeshi of BNY called it essential for expanding client capacity and supporting the market’s move toward mandatory clearing. Susan Hill from Federated Hermes noted that CIL broadens access to cleared repo, delivering client value and regulatory compliance. DTCC’s Laura Klimpel described the launch as part of a broader push for innovation in margin and capital efficiency. Nate Wuerffel of BNY added that CIL represents a major advancement in central clearing for repo deals. The service cuts redundant margin requirements and streamlines operations, making it easier for firms to participate. DTCC expects wider adoption in the coming months as the industry prepares for the SEC’s full clearing requirements. The CIL service is now operational, with more firms likely to follow State Street’s lead.
The CIL service is now active, offering firms a more efficient way to handle repo trades. By reducing margin duplication and simplifying processes, it supports compliance with SEC rules while improving market liquidity. Further adoption is anticipated as the industry adapts to the new clearing standards.
