FICC Netting Member Benefits

Trade Guarantee *
Matched trades have a settlement guarantee in the event of a member default. If your counterparty becomes insolvent prior to settlement, FICC will still settle your trades.

Trade Novation - FICC becomes Your Counterparty *
Once you receive your net obligation, FICC becomes your counterparty for settlement purposes, mitigating your counterparty risk (and maximizing balance sheet offsets where applicable).

• MBSD'S TBA netting reduces the number of settlements by 95%. The introduction of Pool Netting is expected to reduce the overall number of settlements by 98%.
• GSD netting reduces settlements by an average of 75%

Centralized Posting of Collateral
By posting collateral with FICC for all your trades with member firms, you eliminate the need to manage multiple bilateral collateral arrangements. You also get the added benefit of collateral calculation on your entire portfolio, creating the potential for offsets and more efficient use of your collateral.

Reduced Fail Risk with GSD Fail Netting
Each day, your outstanding fails are re-netted with the current day's netting eligible activity

Compliance with TMPG Recommendations
GSD Members will be able leverage FICC's automated capabilities to track fails and automatically apply credits and debits among member firms.

* Currently only the GSD provides a trade guarantee and trade novation. The MBSD will provide a trade guarantee and novation of netted pool trades as part of its move to a Central Counterparty service in the third quarter of 2009.

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