DTCC and BNY Announce Launch of the Collateral-in-Lieu Service

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

The Collateral-in-Lieu service is going to strengthen FICC’s clearing model framework by improving margin and capital treatment for market participants. It also supports the industry’s move toward central clearing in line with the U.S. Securities and Exchange Commission’s Treasury clearing mandate. By reducing duplicative requirements, the service is here to assist firms as they prepare for upcoming regulatory deadlines.

DTCC and BNY Announce Launch of the Collateral-in-Lieu Service

Under the CIL structure, the haircut typically posted by dealers to money market funds and other cash investors in the triparty market is maintained. At the same time, a central counterparty (CCP) lien is in place of both a sponsor guaranty and margin posting to the CCP in most cases. This structure removes double-margining for certain Sponsored members while keeping the operational framework of triparty intact.

The service is on FICC’s existing Sponsored Service legal and operational arrangements, allowing firms already active in the program to integrate the new model with minimal disruption. It also uses BNY’s triparty infrastructure for collateral management and settlement, supporting both “done-away” and “done-with” repo execution methods.

Market participants involved in the first transaction highlighted the importance of the launch for expanding access to cleared repo. For cash investors, the service opens additional cleared trading channels while aligning with regulatory expectations. For dealers and sponsors, it creates more balance sheet flexibility as cleared volumes increase.

DTCC stated that adoption of the Collateral-in-Lieu service is going to grow in the coming months as firms prepare for full implementation of the SEC’s Treasury clearing requirements, scheduled for the end of 2026 and June 2027.

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