FICC’s Sponsored Service enables eligible Netting Members (“Sponsoring Members”) to sponsor qualified legal entities (“Sponsored Members”) into FICC/GSD membership. Sponsoring Members submit eligible securities transactions on behalf of their Sponsored Members for clearing, with FICC interacting solely with the Sponsoring Member for day-to-day processing and settlement obligations.
- Reduction of Counterparty Risk: Central clearing reduces counterparty risk through FICC’s guarantee of settlement in a member default scenario.
- Balance Sheet & Capital Relief: Novation and balance-sheet netting at FICC can reduce capital usage for Sponsoring Members who may be able to offset their obligations to FICC on their Sponsored Member Trades against their other FICC-cleared activity.
- Market Liquidity: Greater access to central clearing for institutional firms and cash providers supports increased lending capacity and may mitigate risk during stress events.
- Execution Flexibility: FICC’s access models expand counterparty choice while maintaining the benefits of central clearing
- Sponsored Members Eligibility: Any legal entity from an with at least one Sponsoring Member willing to sponsor it into FICC/GSD membership.
- Sponsoring Members Eligibility: All full-service Netting Members of FICC/GSD (including inter-dealer brokers trading in their dealer account) may participate as Sponsors. (An IDB Sponsoring Member must open a GSD account subject to full loss mutualization.)
- Sponsoring Member Guaranty: A Sponsoring Member acts as the processing agent for its Sponsored Member(s) trades (“Sponsored Member Trades”) and is an explicit guarantor of its Sponsored Member(s) securities and funds-only settlement obligations to FICC arising in connection with Sponsored Member Trades (excluding Sponsored GC CIL Trades*).
- Clearing Fund: Sponsoring Members are responsible for posting Clearing Fund associated with their Sponsored Members’ activity (excluding Sponsored GC CIL activity in most circumstances*), calculated twice daily on a gross basis; each Sponsored Member’s risk is margined separately.
- Liquidity & Loss Allocation: Sponsoring Members remain obligated to FICC for Capped Contingent Liquidity Facility (CCLF) and loss allocation obligations arising from their clients’ Sponsored activity.
* Subject to change pending SEC rule filing approval.
Sponsored DVP Service
This service enables clients to lend cash or eligible collateral via FICC-cleared DVP repo transactions in U.S. Treasury and Agency securities on an overnight and term basis, as well as outright purchases and sales of such securities, settled on a Delivery-vs-Payment (DVP) basis.
Eligible security types include:
- U.S. Treasury Bills, Bonds and Notes
- U.S. Treasury Inflation Protected Securities (TIPS)
- U.S. Treasury STRIPS
- Non-Mortgage-Backed Agency Securities
- Floating Rate Notes (FRNs)
- Trade Execution: Sponsored Member Trades are executed away from FICC.
- Trade Model: Trades are executed as done-with or done-away.
- Trade Submission: For done-with activity, the Sponsoring Member submits both sides of the trade to FICC. For done-away activity, the Sponsoring Member submits the Sponsored Member’s side of the trade with the Sponsored Member’s 4- or 5- character identifier and the counterparty side of the trade is submitted by the Indirect Participant’s intermediary or a Netting Member other than the Sponsored Member’s Sponsoring Member (“Done-away Netting Member”).
- Trade Matching: Both sides of the Sponsored Member Trade must be submitted to FICC for matching. It is highly recommended that the Sponsored Member’s counterparty include the Sponsored Member’s 4- or 5- character identifier in the Contra Executing Firm field on their trade submission.
- Novation: Upon comparison, Sponsored Member Trades are novated to FICC.
- Settlement: Settlement of Sponsored Member Trades occur as follows -
- Cash Settlement: Forward settling cash trades are netted and settled with FICC.
- Start Leg Settlement: The start leg of a Same-Day Settling Done-with repo transaction settles away from FICC. The start leg of a Same-Day Settling Done-away repo transaction settles with FICC on a trade for trade basis at contract value. The start leg of a forward starting repo transaction is netted and settled with FICc.
- End Leg Settlement: All end legs are netted and settled with FICC.
- Haircuts: A Sponsoring Member and Sponsored Member can elect (as a commercial matter) to apply a haircut as additional collateral above 100% of the cash value lent.
Sponsored General Collateral (GC) Service
This service allows Sponsoring Members to transact in tri-party repo transactions with their Sponsored Members on a general collateral basis, in the same asset classes eligible for the GCF Repo® Service (“Sponsored GC Trades”) and settle those transactions on the tri-party repo platform of a Sponsored GC Clearing Agent Bank.
This service allows Sponsoring Members to transact in tri-party repo transactions with their Sponsored Members on a general collateral basis, in the same asset classes eligible for the GCF Repo® Service (“Sponsored GC Trades”) and settle those transactions on the tri-party repo platform of a Sponsored GC Clearing Agent Bank.
Sponsored GC Trades are transacted using the following Generic CUSIP Numbers):
| Generic CUSIP |
Description |
|
84910LAB2 |
U.S. Treasuries < 10 Yr Maturity |
|
84910LAA4 |
U.S. Treasuries < 30 Yr Maturity |
|
84910LAC0 |
Non-Mortgage Backed U.S. Agency Securities |
|
84910LAD8 |
Fannie Mae and Freddie Mac Fixed Rate MBS |
|
84910LAE6 |
Fannie Mae and Freddie Mac Adjustable Rate MBS |
|
84910LAF3 |
Ginnie Mae Fixed Rate MBS |
|
84910LAG1 |
Ginnie Mae Adjustable Rate MBS |
|
84910LAH9 |
U.S. Treasury Inflation Protected Securities (“TIPS”) |
|
84910LAJ5 |
U.S. Treasury STRIPS |
- Trade Execution: Sponsored GC Trades are executed away from FICC.
- Trade Model: Sponsored GC Trades are currently executed on a done-with basis *
- Trade Submission/Matching (Tri-party Repo Platform): All Sponsored GC Trades must be submitted to the tri-party repo platform of a Sponsored GC Clearing Agent Bank for matching. The collateral provider must submit their trade details with a Dealer Reference that mirrors the Master Reference it would send on its trade submission to FICC.
- Trade Submission/Matching (FICC): For done-with activity, the Sponsoring Member submits both sides of the Sponsored GC Trade to FICC for matching. For done-away activity, the Sponsoring Member submits the Sponsored Member’s side of the trade with the Sponsored Member’s 4- or 5- character identifier and the counterparty side of the trade is submitted by the intermediary of the Indirect Participant or a Done-away Netting Member. In addition, the collateral provider must submit their trade details to FICC with a Master Reference that mirrors the Dealer Reference it submitted on its trade to the tri-party repo platform.
- Collateralization: Each Sponsored GC Trade is required to be fully collateralized with securities eligible under the applicable Sponsored GC Generic CUSIP Number and/or cash.
- Start Leg Settlement: Consistent with the manner in which tri-party repo transactions are settled today outside of central clearing, the Start Leg of a Sponsored GC Trade settles on a trade for trade basis on the tri-party repo platform of a Sponsored GC Clearing Agent Bank.
- Novation: Novation to FICC of the End Leg of a Sponsored GC Trade occurs after the Start Leg of the Sponsored GC Trade has fully settled on the tri-party repo platform of a Sponsored GC Clearing Agent Bank and the Sponsored GC Clearing Agent Bank has provided FICC with reporting of such settlement and the specific securities that were allocated in satisfaction of the settlement of the start leg.
- Repo Interest: The Sponsored GC Clearing Agent Bank on FICC’s behalf, administers the collection and payment of repo interest on a daily basis as between the Sponsoring Member and Sponsored Member (deadline 12:00 PM NYT, except on the end leg settlement date where the interest is passed as part of the end leg settlement).
- Haircuts: Consistent with the Sponsored DVP Service, a Sponsoring Member and Sponsored Member can elect (as a commercial matter) to apply a haircut as additional collateral above 100% of the cash value lent.
* Subject to change pending SEC rule filing approval.
Sponsored GC Service Expansion *
FICC continually seeks ways in which it can facilitate access to central clearing. To provide market participants with more optionality and flexibility, FICC has recently proposed enhancements to its existing Sponsored GC Service. The following enhancements are targeted for launch by year end, pending regulatory review and approval.
- Sponsored GC Collateral in Lieu (CIL) Service: FICC formally submitted a rule filing (SR-FICC-2025-019) at the end of August to the SEC to enhance FICC’s Sponsored Service with a new cleared triparty offering known as the Sponsored GC “Collateral-in-Lieu” service. With this enhancement, cash Investor Sponsored Members (CIL Funds Lenders) would be able to execute tri-party repo transactions on a general collateral basis without the customary posting of margin in most circumstances. Sponsored GC CIL Trades will have a mandatory 2% initial haircut and CIL Funds Lenders will be required to grant FICC a lien over the U.S. Treasury collateral delivered to it at the start leg—in lieu of collecting margin from the Sponsoring Member. Additionally, the Sponsoring Member would not have to act as guarantor for its Sponsored Member’s CIL activity, nor would Funds-Only Settlement Amounts be collected from /paid to the CIL Funds Lender for its CIL activity, but such amounts would be collected from /paid to the GC Funds Borrower on its CIL activity.
- Sponsored GC Service Done-away Capability: Sponsored Members would be able to execute triparty repo transactions on a general collateral basis not only with their Sponsoring Member (done-with) but also with other Netting Members or Indirect Participants (done-away). The Sponsoring Member would continue to act as guarantor and processing agent for its Sponsored Members done-away activity. The operational mechanics for the done-away activity remain aligned with the existing Sponsored GC done-with processes.
FICC’s proposed Sponsored GC Service enhancements expand execution flexibility (done‑away capability) and reduce margin/capital constraints for cash investors (CIL) while preserving the predictability of central clearing and FICC’s independent risk management.
To learn more about these enhancements refer to FICC’s rule filing, SR-FICC-2025-019.
* Subject to change pending SEC rule filing approval.