DTCC and BNY have announced the official launch of the Collateral-in-Lieu (CIL) service under DTCC’s Fixed Income Clearing Corporation (FICC) Sponsored General Collateral (GC) offering. The service has gone live through BNY’s Global Collateral Platform, with BNY Securities Finance and Federated Hermes, Inc. (NYSE: FHI) completing the first repo transaction using the new setup.

The launch introduces an additional clearing option designed to support market participants as they move toward compliance with the U.S. Securities and Exchange Commission’s Treasury clearing mandate. The CIL service adjusts how collateral and margin are handled in sponsored clearing by allowing a central counterparty lien to be applied in place of both a sponsor guaranty and margin posted to the CCP in most cases. At the same time, the haircut normally applied by dealers to money market funds and other cash investors in triparty arrangements remains unchanged.

DTCC and BNY Launch Collateral-in-Lieu Service

By removing overlapping margin requirements for certain sponsored members, the service addresses long-standing balance sheet and operational challenges in the repo market. It builds on FICC’s existing sponsored clearing framework and legal documentation while making use of established triparty workflows. This structure is here to simplify settlement and collateral management for dealers, sponsors, and cash investors that participate in sponsored cleared repo.

The Collateral-in-Lieu service operates on BNY’s triparty infrastructure and supports both “done-away” and “done-with” execution models. This flexibility allows firms to integrate the service into their current trading and settlement processes without fundamental changes to execution preferences.

Industry participants involved in the first transaction described the launch as a step toward broader cleared repo participation ahead of mandatory clearing deadlines. From the perspective of cash investors, the service opens additional access to cleared repo transactions while aligning with evolving regulatory expectations. For securities finance providers and clearing members, it creates more capacity to support client activity as volumes migrate to central clearing.

DTCC indicated that adoption of the Collateral-in-Lieu service is going to increase as firms continue preparations for the SEC’s Treasury clearing requirements. They are ready to be in through the end of 2026 and mid-2027.

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