The DVP Service supports the clearance and settlement of buy/sell transactions, repo transactions, and Treasury auction takedown purchases and secondary market trades.
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All eligible Netting Members of GSD may use the Netting and Settlement service. In addition to Netting Member services, GSD services another category of Members known as Comparison-only Members. GSD’s comparison services for Comparison-only Members, does not include novation, risk management, netting or settlement services for their trades.
Netting Members are required to submit all of their netting-eligible trades to GSD. This includes buy/sell transactions with a next day settlement or extended settlement up to 365 days, repo/reverse repo transactions that are overnight, forward-starting or term repos with a settlement date of up to 735 days (2 years) and U.S. Treasury auction purchases. Trades are received, validated and compared through GSD's Real-Time Trade Matching (RTTM®) service. This results in the evidence of a valid, binding and enforceable contract between counterparties whose trades have been compared, and it is at time of comparison that GSD provides a guaranty of settlement for all Netting Members. Through netting, GSD establishes a single net long or short position for each member’s trade activity in a given security due to settle the next business day. The netting output is communicated to GSD's Netting Members. The resulting settlement obligations generated represent receive and deliver obligations that are settled on a delivery versus payment (DVP) basis over the Fedwire or through GSD's clearing bank(s).
Eligible Security Types
The below Fedwire service eligible securities are eligible for comparison and netting under the DVP Service:
- U.S. Treasury Bills, Bonds and Notes,
- U.S. Treasury Inflation Protected Securities (TIPS),
- U.S. Treasury Segregated Trading Registered Interest and Principal Securities (STRIPS),
- U.S. Treasury Floating Rate Notes (FRNs), and
- Non Mortgage-Backed U.S. Agency Securities (fixed rate and zero coupon securities only).
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