The Depository Trust & Clearing Corporation (DTCC) and BNY Mellon have launched a new Collateral-in-Lieu (CIL) service through DTCC's Fixed Income Clearing Corporation (FICC) subsidiary and BNY's Global Collateral Platform. The service, which is already in production, is designed to improve margin efficiency and accelerate the market's transition to centrally cleared U.S. Treasury repo transactions, in preparation for the Securities and Exchange Commission's (SEC) upcoming clearing mandate.
The first repo trade using the new framework was successfully executed by BNY Securities Finance and asset manager Federated Hermes. The service introduces a structural change to the traditional sponsored clearing model. Instead of requiring both a sponsor guaranty and margin posting to the central counterparty (CCP), the CIL service applies a CCP lien directly to collateral held in triparty. This approach eliminates double-margining for certain sponsored participants, delivering capital and liquidity benefits while maintaining robust risk management and preserving the haircuts dealers post to money market funds.
The launch is a direct response to industry concerns about balance sheet usage and operational readiness ahead of the SEC's mandate, which will require broader central clearing of repo and cash Treasury transactions beginning in late 2026 and mid-2027. DTCC and BNY executives position the service as a critical tool to lower barriers to adoption. Laura Klimpel, Managing Director at DTCC, stated the service enhances margin and capital efficiency while supporting compliance. Nate Wuerffel of BNY highlighted it provides a more capital-efficient path to central clearing.
The service leverages BNY's established triparty infrastructure for collateral management and settlement, supporting both "done-with" and "done-away" trade execution styles to minimize operational disruption. DTCC expects adoption to increase in the coming months as the market prepares for full implementation of the SEC's requirements.
