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Financial markets

DTCC's FICC Submits Rule Filing with the SEC for Approval to Offer New Collateral-in-Lieu Service

Strategic Insights

— 2 min read

The Depository Trust and Clearing Corporation's (DTCC) Fixed Income Clearing Corporation (FICC) subsidiary has formally filed with the Securities and Exchange Commission (SEC) a rule filing to enhance FICC's Sponsored Service with a new cleared tri-party offering known as the Sponsored General Collateral (GC) "Collateral-in-Lieu" service. The proposed service is designed to solve for critical industry concerns regarding the need for enhanced margin and capital efficiency to ensure a smooth implementation of the U.S. Treasury Clearing mandate. The service would leverage the haircut typically posted by dealers to money market funds and other cash investors in tri-party via a CCP lien that is applied "in lieu" of both a Sponsor guaranty of client performance and the posting of margin to the CCP (in most circumstances).

The Sponsored Service has been an incredibly popular buy-side clearing solution, with over $2 trillion in volume flowing through the Service on a typical day. The proposed Collateral-in-Lieu service has been intentionally designed to build upon that success and allow Sponsors and their clients to leverage many of their existing legal agreements and operational processes for Sponsored repo, but take the margin and capital efficiencies of the product to the next level. FICC aims to launch the Collateral-in-Lieu service in December 2025, subject to regulatory approval of the filing.

Key Takeaways:

  • FICC has submitted a rule filing with the SEC to offer a new "Collateral-in-Lieu" service as part of its Sponsored General Collateral (GC) offering, designed to enhance margin and capital efficiency for the U.S. Treasury Clearing mandate.
  • The proposed service would leverage the haircut typically posted by dealers to money market funds and other cash investors in tri-party via a CCP lien that is applied "in lieu" of Sponsor guaranty and CCP margin.
  • The service aims to solve for the "double-margining" challenge, where Sponsors typically post haircuts to money market funds and CCP margin on behalf of clients.
  • FICC's Sponsored Service has over $2 trillion in daily volume and has been popular among buy-side clearing users.
  • The proposed Collateral-in-Lieu service aims to build upon the success of FICC's Sponsored Service and enhance margin and capital efficiencies for users.
  • The service would be offered by FICC leveraging BNY's tri-party infrastructure, with both "done-away" and "done-with" styles of trade execution to be supported.
  • FICC aims to launch the Collateral-in-Lieu service in December 2025, subject to regulatory approval of the filing.
  • DTCC processed securities transactions valued at U.S. $3.7 quadrillion in 2024, and its depository subsidiary provided custody and asset servicing for securities issues from over 150 countries and territories valued at U.S. $99 trillion.
  • BNY oversees $55.8 trillion in assets under custody and/or administration as of June 30, 2025, and BNY Investments manages over $2.1 trillion in assets under management.

Statistics:

  • $2 trillion: daily volume of FICC's Sponsored Service
  • $3.7 quadrillion: total securities transactions processed by DTCC in 2024
  • $99 trillion: total value of securities issues from over 150 countries and territories serviced by DTCC's depository subsidiary in 2024
  • $55.8 trillion: assets under custody and/or administration overseen by BNY as of June 30, 2025
  • $2.1 trillion: assets under management by BNY Investments

Sources:

  • The Depository Trust and Clearing Corporation, "FICC Submits Rule Filing with the SEC for Approval to Offer New 'Collateral-in-Lieu' Service," September 3, 2025
  • The Bank of New York Mellon, "BNY Mellon," accessed September 3, 2025
  • DTCC, "DTCC," accessed September 3, 2025

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