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Indirect Participation

To further support the U.S. government securities market, GSD continues to expand its capabilities by offering its central clearing services to eligible clients (i.e., entities that are not full members or direct members of FICC). GSD offers such clearing services to eligible clients through the Sponsoring/Sponsored Member Service and the Agent Clearing Service, all of which allows for a larger range of market participants to benefit from FICC's risk management practices.

Indirect Participation

Membership Types, Eligibility,
Capital & Margin Requirements:

FICC’s Sponsored Service allows certain Netting Members to sponsor, as Sponsoring Members, eligible legal entities as Sponsored Members into membership at the Government Securities Division (GSD) of FICC.

A Sponsoring Member’s primary function is to guaranty their Sponsored Member clients’ performance to the CCP. Sponsoring Members also facilitate their Sponsored Member clients’ trading activity and act as processing agents on their behalf for all operational functions, including trade submission and settlement with the CCP.

A Sponsoring Member is permitted to submit to FICC on behalf of its Sponsored Members, transactions in eligible securities for clearing. Sponsoring Members, at their discretion, have the ability to let their clients trade with counterparties other than themselves, providing sponsored members with the same execution flexibility they have in the bi-lateral market today.

Cleared buyside activity through FICC’s Sponsored Service has experienced 90% year-over-year growth, with 36 Sponsoring members now contributing to daily volumes between $1.7T and over $2T.

MEMBERSHIP ELIGIBILITY REQUIREMENTS

Through the expanded Sponsored Service, a broader category of market participants can participate in the service as sponsors, including Dealers, non-U.S. Banks and Prime Brokers

  • All applications for Sponsoring Membership are decided on by FICC Management and the FICC Board of Directors.
  • Must be a Netting Member that is a Tier One Netting Member (with certain exceptions) to be a Sponsoring Member.
  • Financial Responsibility – Applicant must have sufficient financial ability to make anticipated required deposits to the Clearing Fund and Funds-Only Settlement Amounts.
  • Operational Capability – Applicant must successfully complete network and connectivity testing at the current FICC standards..

CAPITAL REQUIREMENTS

  • The Corporation may impose financial requirements on a Netting Member applying to become a Sponsoring Member that are greater than the financial requirements applicable to it in its capacity as a Netting Member based upon the level of anticipated positions and obligations, the anticipated risk associated with the volume and types of transactions, and the overall financial condition of such applicant.

MARGIN REQUIREMENTS

  • Applicants must post an initial Clearing Fund deposit based on the anticipated volume of the Sponsoring Member’s Omnibus Account activity, prior to going live
  • Post go-live, a Sponsoring Member must meet a required Clearing Fund amount based on the Sponsoring Member’s Omnibus Account’s unsettled positions and the market risk associated with those positions; this amount is calculated twice daily. Note: For purposes of satisfying the Sponsoring Member’s Clearing Fund requirements, a Sponsoring Member’s activity in its proprietary Netting Member account will be treated separately from the activity in its Omnibus Account.

FICC’s Sponsored Service allows certain Netting Members to sponsor, as Sponsoring Members, eligible legal entities as Sponsored Members into membership at the Government Securities Division (GSD) of FICC.

Sponsoring Members facilitate their sponsored clients’ GSD trading activity and act as processing agents on their behalf for all operational functions, including trade submission and settlement with the CCP. A Sponsoring Member is permitted to submit to FICC on behalf of its Sponsored Members, transactions in eligible securities for clearing.

Sponsored Membership is a limited GSD membership type for legal entities that satisfy certain requirements. Cleared buyside activity through FICC’s Sponsored Service has experienced 90% year-over-year growth, with 36 Sponsoring members now contributing to daily volumes between $1.7T and over $2T.

Balance sheet netting, through FICC’s efficient and systematic novation of financing transactions, helps clients optimize capital by freeing up billions of dollars that they can use for other investment purposes. At the end of 2024, balance sheet savings across the industry, through use of the Sponsored Service, topped $900B.

MEMBERSHIP ELIGIBILITY REQUIREMENTS

  • Must be sponsored into membership by a Sponsoring Member.
  • Sponsored Members are principally liable to FICC for their own securities and funds-only settlement obligations. Every Sponsored Member must also have at least one Sponsoring Member that is willing to sponsor it into GSD membership and to satisfy the responsibilities of being a Sponsoring Member with respect to such Sponsored Member’s cleared activity, including providing FICC with a back-stop guaranty of all of the Sponsored Member’s obligations to FICC.
  • Any legal entity from an FICC approved jurisdiction that has at least one Sponsoring Member willing to sponsor it into membership at the Government Securities Division (GSD) of FICC is eligible to participate in the service as a Sponsored Member.

CAPITAL REQUIREMENTS

  • Sponsored Members do not have financial requirements.
  • Sponsored Members are not subject to default loss allocation or mutualization.

MARGIN REQUIREMENTS

  • Sponsored Members are not required to post a Clearing Fund deposit.
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The statements and other information available on and through this page, including information in any links and documents available on this page, is for informational purposes only. Please refer to the GSD Rules for descriptions of the rules, procedures, and all rights, obligations, and other requirements of both FICC and its participants in connection with their use of GSD’s services. In the case of any discrepancy between the information available here and the GSD Rules, the GSD Rules govern.

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