Core Insights - The Fixed Income Clearing Corp. (FICC) has launched a new Collateral-in-Lieu (CIL) service aimed at enhancing the efficiency of repo transaction clearing while complying with SEC regulations [2][3][5] Group 1: Service Overview - The CIL service is designed to be margin and capital-efficient, facilitating repo transactions through BNY's Global Collateral Platform [2][3] - The first repo trade using the CIL service was executed by BNY Securities Finance and Federated Hermes, indicating initial market adoption [3] - The service maintains the typical haircut for dealers while implementing a CCP lien, which reduces double-margining for some sponsored members [4] Group 2: Benefits and Compliance - The CIL service reduces duplicative margin requirements for sponsors and their clients, streamlining operational processes [5] - It supports compliance with the SEC's U.S. Treasury clearing rule, enhancing market liquidity [5] - The service leverages BNY's triparty infrastructure for collateral management and settlement, accommodating various trade execution styles [5]

Core Insights - The Depository Trust & Clearing Corporation (DTCC) and BNY have launched the Collateral-in-Lieu (CIL) service under DTCC's Fixed Income Clearing Corporation (FICC) subsidiary, enhancing the clearing model offerings for the financial services industry [1][2] Group 1: Service Overview - The CIL service provides significant margin and capital efficiencies, facilitating the market's transition to central clearing as mandated by the SEC for U.S. Treasury [2] - The service maintains the haircut posted by dealers to money market funds while implementing a CCP lien in lieu of a Sponsor guaranty and margin posting [2] - This approach eliminates double-margining for some Sponsored members and streamlines operational processes, leveraging triparty benefits [2] Group 2: Industry Impact and Adoption - DTCC anticipates increased adoption of the CIL service as the industry prepares for full implementation of SEC's clearing requirements by the end of 2026 and June 2027 [3] - DTCC has over 50 years of experience as the post-trade market infrastructure for the global financial services industry [3] Group 3: DTCC Operations and Scale - DTCC automates, centralizes, and standardizes financial transaction processing from 20 locations worldwide, enhancing risk mitigation, transparency, and efficiency for market participants [4] - In 2024, DTCC processed securities transactions valued at $3.7 quadrillion and provided custody and asset servicing for securities valued at $99 trillion [4] - The Global Trade Repository service processes over 25 billion messages annually through locally registered trade repositories [4]