How It Works

The repo market currently operates through both voice broker transactions and screen trading and both types of trade sources are accepted by LCH.Clearnet Ltd.

Direct or broker trades are fed into an independent matching system, called ETCMS. Once the trade has been matched and validated to check it is within the RepoClear parameters, it is registered and LCH.Clearnet Ltd assumes the counterparty risk.

ATS(Automated Trading System) trades are registered with RepoClear  when they are 'agreed on the screen'. The trade details are sent automatically to LCH.Clearnet Ltd, supporting STP. Both repo and cash bond trades transacted on ATSs are registered by the Clearing House on an open offer basis, thereby facilitating trade anonymity.

On receipt and confirmation of eligible transactions, trades are governed under the rules of LCH.Clearnet Rulebook.

Settlement Netting

At the prescribed time in each market, RepoClear nets and shapes all delivery obligations due for settlement the next business day. In some markets, the settlement netting may result in several delivery obligations for LCH.Clearnet due to cross-border settlement or maximum delivery size requirements.  Members are then notified of their own specific delivery obligations.

Payment Netting

If there are no securities delivery obligations all net cash delivery obligations are aggregated into one amount per market, which is paid through the appropriate depository.  Margin obligations from all exchange-traded and bilaterally-traded contracts, together with any coupon payments, are netted into a single payment per currency per day and paid through the Protected Payments System (PPS).

Fixed Income User Groups

There is user involvement during all stages of development. LCH.Clearnet Ltd works very closely with market participants  through well established User Groups to ensure that our offering is tailored to their ever changing requirements.

The Fixed Income Product Advisory Group (PAG) is made up of key market participants.  It provides strategic direction to the development of LCH.Clearnet’s service and is chaired by an LCH.Clearnet Group Board Member ensuring that members’ views are considered at the highest level.

The PAG is supported by the Fixed Income Operational Working Party (FIOWP) which deals with matters pertaining to operational implementation, processes and projects. More recently, RepoClear has added a Risk Working Group (RWG) to support Risk Related developments.