The Funds-Only Settlement (FOS) Service provides a standardized, automated method for settling non-trade,funds-only payments each day between GSD and its Netting Members' Funds-Only Settling Banks for the GCF Repo® Service and CCIT™ Service.
FOS eliminates manual processing and reduces costs by aggregating payments due to or from a customer and then automatically transferring the funds into or out of the Netting Member’s Funds-Only Settling Bank.
For GCF Repo, a Netting Member’s FOS Amount is an aggregate cash amount that is paid to, or collected from, Members each day. A Netting Member’s GCF-related FOS Amount is composed of calculated values that are associated with each Member’s overall GCF Repo trading activity calculated at End of Day, and is collected or paid the next business day.
A Netting Member's activity that is limited to the GCF Repo Service and/or the CCIT Service will only need to settle their Funds-Only Settlement cash obligation amount during the Start-of-Day Funds-Only Settlement Cycle. If the Netting Member participates in the DVP Service, and GCF Repo Service and/or CCIT Service, then such Member would be obligated to settle their Funds-Only Settlement Amounts for both the Start-of-Day Funds-Only Settlement Cycle and the Intraday Funds-Only Settlement Cycle. The components and their calculated figures are reported to Netting Members on a daily basis.
The FOS service is automatic and mandatory for FICC Members that have FOS obligations, except for CCIT Members who may choose to pay their Funds-Only Settlement Amount debits directly to the Corporation.
For the Start of Day cycle, Funds-Only Settling Banks must submit an acknowledgement or refusal to settle their Netting Members Net Funds-Only Settlement Figures by the Acknowledgement Cutoff Time. The settlement of FOS Amounts is completed by 10:00 AM.* Refer to the Schedule of Timeframes in the FICC GSD Rulebook for the most up to date timeframes.
The Start of Day GCF Repo/CCIT Funds Settlement amount may consist of the following FOS components:**
The Start of Day Funds-Only Settlement Cycle for GCF Repo® is a daily process that includes the following Funds-Only Settlement components for Netting Members:
- GCF Forward Mark Adjustment Payment: Equal to the sum of the GCF Interest Rate Mark and Accrued Repo Interest-to-Date, as indicated on the GCF Forward Mark Report and the GCF Finance Report. Each day, as part of the GCF Repo FOS process, the GCF Forward Mark is passed from one party to another (Cash Lender to Cash Borrower and vice versa).
- GCF Forward Mark Adjustment Payment Return: The return of the GCF Forward Mark Adjustment Payment collected or paid during the previous business day's Start of Day Funds-Only Settlement cycle.
- GCF Interest Adjustment Payment: The interest calculated on the GCF Forward Mark Adjustment Payment collected or paid during the previous business day’s Funds-Only Settlement cycle using the Overnight Investment Rate.
- GCF Transaction Adjustment Payment (TAP): The net total repo interest on GCF Repo and CCIT Transactions, as applicable, at maturity (on settlement date) as indicated on the GCF Final Settlement Report and the GCF Finance Report.
- CCIT Daily Repo Interest: The daily accrued repo interest earned on CCIT™ trades since the previous business day, which is collected from the Netting Member as counterparty to the CCIT Trade and is payable to the CCIT Member, as indicated on the CCIT Trade Report and the GCF Finance Report.
*All times herein are ET.
**For additional clarification, please note that the Invoice Amount and the Miscellaneous Adjustment Amount is not reported on the GCF Funds Settlement Report but may be applicable to Members of the CCIT Service or GCF Repo Service and is reported on the Start of Day Funds Settlement Statement that is generated nightly and posted to the Funds-Only Settlement Folder within FICC Repot Center.
- Invoice Amount – on the 10th business day of the month, GSD will apply charges based on:
- a Member’s business activity of the prior month,
- fines imposed during any month, and
- adjustments to prior bills as indicated on the Invoice.
- Miscellaneous Adjustment – any other cash adjustment payments due to or owed by a Netting Member.
To learn more, check out the GCF Repo FOS FAQs here or check out the below examples showing how GCF Funds-Only Settlement is calculated based on term.
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GCF Repo FOS Scenario for Overnight GCF Repo: Dealer View
GCF Repo FOS Scenario for Term GCF Repo: Dealer View
GCF Repo FOS Scenario for Overnight CCIT™ Transaction
GCF Repo FOS Scenario for Term CCIT™ Transaction
FOS Interest Adjustment Payment Settlement Change – Frequently Asked Questions