Trade Matching is the first step in the settlement process for transactions under the GCF Repo® Service. Trade Matching consists of the receipt, validation and reporting of trade data received from participating Netting Members on GCF Repo transactions evidencing a match of trade terms that facilitates timely settlement.
As part of trade comparison in the GCF Repo Service, transactions are submitted on a locked-in basis. Comparison is critical because, under FICC GSD Rules, it results in evidence of a valid, binding and enforceable contract between counterparties whose trades have been compared and it is at time of comparison that FICC provides a guaranty of settlement for all GCF Repo Service Netting Members.
Locked-in comparison requires only a designated locked-in trade source to submit trade details to affect a match. A trade is deemed compared by GSD at the point in time at which GSD is in receipt of the trade data from the locked-in trade source. Upon comparison, GSD provides a guaranty of settlement (i.e., makes the counter-party whole), provided the trade meets the requirements of the FICC GSD Rules and was entered into in good faith. The locked-in trade source must be authorized by the Netting Member(s) on whose behalf it will be submitting trade data. GSD must be provided with documentation signed by both parties (both the locked-in trade source and the Netting Member) authorizing GSD to receive any trade data submitted by the locked-in trade source.
For the GCF Repo Service, Inter-Dealer Brokers (IDBs) are considered a locked-in trade source. An example of a locked-in trade in GCF Repo would be when participating Dealer Members enter into a trade by working through an Inter-Dealer Broker (IDB) to negotiate with one another anonymously. The Dealer Members state their trading terms to the IDB. Once the trade details have been agreed upon, the IDB who has been authorized by the Dealer Members, submits a locked-in trade to GSD on their behalf.
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