Occasionally, banks or dealers need to reclaim a security that has been sold as part of a term repo. To do this, they would substitute the current collateral with collateral of equivalent value (known as replacement collateral) in order to keep the repo agreement intact. The replacement collateral security then becomes the collateral for the repo.
Through the DVP Repo Service, the Fixed Income Clearing Corporation’s (FICC) Government Securities Division (GSD) processes, compares, novates and nets DVP Repo transactions (along with other government securities trades) each day as part of its post-trade processing. Included in this repo service is an automated facility that supports the substitution of repo collateral. To make use of the facility, Members must follow an established set of rules governing how substitution information should be communicated to GSD and when substitute collateral must be made available.
FICC GSD DVP Repo Netting Members that are a party to direct or Brokered Repo Transactions are eligible to use the DVP Repo Collateral Substitution service. For Brokered Repo Transactions, which make up the bulk of repo transactions, the Repo Broker who executed the trade is responsible for coordinating the substitution and sending the substitution request to FICC.
- For more information on DVP Repo Collateral Substitution timeframes, refer to the Schedule of Timeframes in the FICC GSD Rulebook.
- For more information on DVP Repo Collateral Substitution Processing Fees, refer to the Repo Collateral Substitution Fees section of the Fee Structure in the FICC GSD Rulebook.
- For more information on DVP Repo Collateral Substitution Late Fees, refer to the Late Fees section of the Fee Structure in the FICC GSD Rulebook.
Learn how to submit or view DVP Repo Collateral Substitutions in the Real-Time Trade Matching (RTTM®) Web application.
View examples of DVP Repo Collateral Substitutions.
View the FAQ for DVP Repo Collateral Substitutions.
Please note that some of the above resources require logging in to the DTCC Learning Center.