The GCF Repo® service enables dealers to trade general collateral repos, based on rate, term, and underlying product, throughout the day without requiring intra-day, trade-for-trade settlement on a Delivery-versus-Payment (DVP) basis.
The GCF Repo® service enables dealers to trade general collateral repos, based on rate, term, and underlying product, throughout the day without requiring intra-day, trade-for-trade settlement on a Delivery-versus-Payment (DVP) basis. The service helps foster a highly liquid market for securities financing. To participate, dealers must be netting members of FICC’s Government Securities Division (GSD).
Dealers execute GCF Repos through inter-dealer brokers, who are also members of FICC, on an anonymous, or “blind,” basis. FICC guarantees settlement as soon as it receives the data from the broker and compares the transaction. GCF Repo transactions are settled on a tri-party basis, which requires dealer participants to have an account with either one or both of the participating clearing banks: The Bank of New York Mellon or JPMorgan Chase.
GCF Repo participants can trade in generic CUSIP numbers throughout the day and then, after the netting process at the end of the day, allocate specific securities to their net settlement obligations.
Netting members of FICC’s Government Securities Division are eligible to participate. Access to the GCF Repo service is also available to non-GSD members through FICC’s Executing Firm feature. It permits current GSD netting members, when they function as “introducing members,” to submit trades on behalf of non-FICC members such as institutions and correspondent firms.
The GCF Repo service provides valuable benefits to participants in the U.S. Government securities market. These include:
Through its Real-Time Trade Management (RTTM) service, FICC’s GSD provides an online, information system for GCF Repos that is capable of displaying up-to-the-minute trade information and netting results throughout the day. After trades are completed, brokers are required to submit them promptly to FICC by screen input. Upon receipt of the data, FICC immediately reports the transaction details to dealers. Dealer positions are automatically updated, and may be viewed on-line via GCF Repo’s dynamic display screens. The most recent trades and position information are displayed simultaneously. Position information is available both at the individual CUSIP level and the cumulative, overall level.
Individual GCF Repo transactions may be submitted via interactive messaging in amounts of up to $9.999 billion. Individual GCF repo trades submitted via RTTM's Web application, however, are limited to $2 billion in size. The size of each DVP repo trade that can be submitted is $50 million.
After trading ends, GSD conducts an afternoon net exclusively for GCF Repo activity. To establish a single net receive or deliver position in each generic CUSIP, the netting process combines each dealer’s new GCF activity eligible for settlement with the dealer’s carry-over activity, including previous term and previously submitted forward-starting activity that has reached its start leg settlement date.
For each such CUSIP, a dealer member is either a net securities borrower (i.e., money lender) or a net securities lender (i.e., money borrower). Bank of New York Mellon and JPMorgan Chase provide the mechanism for allowing a chain of simultaneous collateral and cash movements to occur between GSD and its dealer members. All positions are reversed on the morning of the next business day prior to the opening of the securities Fedwire. Term repos themselves are collateralized by cash intra-day or by a hold on dealers’ net free equity (NFE) at the clearing banks.
Collateral currently accepted for GCF Repos include:
If you would like further information regarding GCF Repo processing, please contact your DTCC relationship manager via the Relationship Services Group Hotline at (800) 422 0582, or by email at firstname.lastname@example.org.
Last updated October 29, 2009