The Fixed Income Clearing Corporation, a subsidiary of the Depository Trust & Clearing Corp., as soon as next month plans to ask the Federal Reserve and the Securities and Exchange Commission for permission to expand its repo clearing services to trades between banks and qualified investors such as mutual funds, which are major lenders in repo.
DTCC’s repo clearing service currently covers transactions between dealers.
“This would help prevent a rush to liquidate collateral at once which could create fire-sale conditions,” said Murray Pozmanter, managing director and head of clearing agency services at DTCC, a utility controlled by large banks.
Other clearinghouse operators, including CME Group Inc. and LCH.Clearnet Group Ltd., also are preparing proposals to clear repo trades for investors in the U.S., said people familiar with their plans.
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