BrokerTec Clearing Company, L.L.C. (BCC), clearing affiliate for BrokerTec Futures Exchange L.L.C. (BTEX), and Government Securities Clearing Corporation (GSCC), a subsidiary of The Depository Trust & Clearing Corporation, announced today that cross-margining between the two clearing organizations will begin on April 19, 2002. Implementation of the agreement follows approval of a GSCC rule filing by the Securities and Exchange Commission (SEC) in late March.
The arrangement will allow participating members of both entities to cross-margin their U.S. Government securities buy-sell and repo activity against U.S. Government securities futures contracts cleared by BCC. The BCC and GSCC arrangement will allow participants to reduce their overall margin requirements, increase collateral liquidity and lower operational costs.
Hank Mlynarski, president of BrokerTec Clearing Company, L.L.C., said that he was extremely pleased that BCC and GSCC can now implement the cross-margining arrangement for the benefit of their common clearing members, and he thanked the SEC for its prompt review and approval.
“Cross-margining is an important component of the overall BrokerTec strategy,” Mlynarski said. “It will provide significant collateral savings to our member firms and its effectiveness in reducing systemic risk during times of market stress has been widely recognized. We look forward to implementing our arrangement with GSCC.”
“GSCC is pleased to expand its cross-margining program to include BrokerTec,” said Jeff Ingber, general counsel and managing director at GSCC. “The relationship will bolster GSCC’s efforts to
achieve two key objectives – enhance the safety and soundness of clearing systems and expand the potential for significant margin savings for participants. This is the third cross-margining pact GSCC has signed in the last few months, as we build a hub at GSCC for cross-margining that will help reduce the industry’s collateral costs.”