The International Securities Association for Institutional Trade Communication (ISITC), the industry trade group focused on standards in transaction processing and related communications, has released an updated Market Practice for tri-party repo settlement and confirmation.
The new guidelines, developed along with the Asset Managers Forum (AMF), incorporates new reforms released by the Federal Reserve Bank of New York.
The reforms recommend the automated netting of tri-party reverse repo trades to reduce the number of intraday cash wires. The Market Practice addresses the various netting scenarios presented by these guidelines, including single deal netting scenarios, multiple deal single broker netting scenarios, and multiple deal multiple broker netting scenarios.
Part of our mission at ISITC is to respond to industry regulation and develop best practices for all market constituents, says Erica Choinski, executive sponsor of the ISITC Settlements Working Group. When we first learned of the [Fed] guidelines, we teamed up with the AMF to really understand how we could comply with the new reforms and bring a greater degree of automation to the netting process. ISITC encourages all US tri-party repo market participants to utilize this market practice, and we welcome continued feedback from the industry.
The document defines tri-party reverse repos and the business practices between the investment manager, custodian bank and/or accounting agent. ISITC is also currently developing best practices for matching, including repo matching. Click here to download (PDF).
(CG)