Service & Product Development

Existing Services

RepoClear clears cash bond and repo trades in the following markets: Austrian, Belgian, Dutch, German, Irish, Finnish, Portugese and UK government bonds.  Additional markets served include: German Jumbo Pfandbriefe and Supranationals, Agency and Sovereign. RepoClear will accept the following types of specific bond repo trades: Classic fixed rate repos with 1st leg settlement on a same day and forward start basis with a term not greater than one year.

In addition to the above a number of General Collateral services are in the process of being established.  Sterling GC was launched in March 2007 and €GC will be launched in 2008.

Product Development

These new products are being launched on the existing RepoClear service on a non-mandatory basis.

€GC

€GC is the introduction of an innovative General Collateral (GC) clearing service commencing with a range of cash-led euro area Government bond baskets, classified by credit rating. The €GC product is a natural extension of the Sterling GC product (see below).  It represents a replication of the DBV product structure in the Euro market in that it utilises the auto-allocation tools provided by the major ICSDs (Euroclear and Clearstream) to effect settlement.

€GC provides RepoClear participants with a step-change improvement in collateral management efficiency and flexibility. The key features of the product are:

• Trading of standardised GC baskets;
• Term trades characterised as a series of linked one-day settlements such that all open trades expressed in the basket can net against each other, each day, irrespective of term; and,
• Settlement achieved through the use of the auto-allocation tools provided by the ICSDs (Euroclear and Clearstream) for their Tri-party businesses. 

The €GC Service Description and a presentation on €GC is available for download in the secure members area (General Information -- Fixed Income Services).

Sterling GC

Sterling GC is a product based on the Delivery-By-Value (DBV) mechanism used by CREST, whereby a member may borrow or lend cash versus overnight collateral. The system automatically selects and delivers securities and retrieves them the following day over the term of the transaction.

DBV for Gilts is a cash-led market, which is used as a funding and collateral management tool by major banks and investment institutions. Most DBV business is done short-term and therefore DBV is strongly linked to the Sterling money market.

Specifically, the LCH.Clearnet Sterling GC product allows members to clear overnight and term UBG class DBV trades and thereby maximise the existing benefits of using Repoclear in this market segment.

The Sterling GC Service Description, a presentation and technical specification documents are available for download in the secure members area (General Information -- Fixed Income Services).

For more information, please contact:

Nick Maggs, Fixed Income Market Liaison, Tel: +44 20 7426 7442,
E-mail: nick.maggs@lchclearnet.com