DTCC and BNY Launch Collateral-in-Lieu Service

The Depository Trust & Clearing Corporation (DTCC) and BNY have officially launched DTCC’s Fixed Income Clearing Corporation Collateral-in-Lieu service under the Sponsored General Collateral offering, representing a significant advancement in the U.S. repo market. The launch took place via BNY’s Global Collateral Platform, while BNY Securities Finance and Federated Hermes completed the first repo trade using the new solution. 

As a result, the market moves closer to achieving greater efficiency and readiness for upcoming regulatory requirements. The new service enhances FICC’s clearing model by delivering meaningful margin and capital efficiencies, while also accelerating the industry’s transition toward central clearing in line with the Securities and Exchange Commission’s U.S. Treasury clearing mandate.

Notably, the Collateral-in-Lieu structure maintains the haircut typically posted by dealers to money market funds and other cash investors in triparty arrangements. At the same time, it applies a central counterparty lien in place of both a sponsor guaranty and margin posting to the CCP in most cases. 

DTCC and BNY Launch Collateral-in-Lieu Service

Consequently, this framework eliminates double-margining for certain Sponsored members and simplifies operational processes across the market. In addition, the service builds on existing Sponsored Service processes and legal agreements, allowing participants to benefit from streamlined onboarding and familiar workflows. By leveraging BNY’s triparty infrastructure, the solution supports both “done-away” and “done-with” trade execution styles, while improving collateral management and settlement efficiency. 

Therefore, market participants gain easier access to central clearing while supporting liquidity in the U.S. Treasury market. Laura Klimpel, Managing Director and Head of DTCC’s Fixed Income and Financing Solutions, stated, “We are pleased to officially launch our Collateral-in-Lieu service on BNY’s Global Collateral Platform and congratulate BNY Securities Finance and Federated Hermes on completing the first repo trade.” She added, “This important milestone underscores our commitment to delivering innovative solutions that enhance margin and capital efficiency and support firms as they work toward regulatory compliance.” 

Similarly, Nate Wuerffel, BNY’s Head of Market Structure and Product Leader for the Global Collateral Platform, said, “Collateral-in-Lieu represents a major step forward in the path to central clearing by introducing a margin and capital-efficient means to clear repo transactions.” Meanwhile, Federated Hermes highlighted the benefits for cash providers, as Susan Hill noted, “This solution expands our access to cleared repo, helping us deliver value to clients while meeting evolving regulatory requirements.” Looking ahead, DTCC expects adoption of the Collateral-in-Lieu service to increase steadily as the industry prepares for full implementation of the SEC’s clearing requirements toward the end of 2026 and in June 2027.

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