As a CCP, FICC guarantees all member trades at the time of trade comparison, regardless of whether the trade is novated versus FICC during the Pool Netting process. All MBSD Clearing Members are guaranteed service members and participate in the MBSD’s CCP service, which largely eliminates counterparty risk for its members.
Among the tools FICC employs to help manage risk are requirements that members post collateral and that securities be marked to market prices daily. In addition, FICC carefully manages which firms or institutions are eligible for membership.
MBSD trades and positions are guaranteed at the TBA level, including SPTs, Pool Instructs, and Pool Obligations.
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