FACT SHEETThe Depository Trust & Clearing Corporation

SPONSORED SERVICEThe Sponsored Service offers eligible clients the ability tolend cash or eligible collateral via FICC-cleared DVP repo
throughout the day, a transformation of the repo
marketplace. Eligible transactions include two-directional(i.e., cash borrowing and cash lending) overnight and term
DVP repo in U.S. Treasury and Agency securities andoutright purchases and sales of such securities.

OVERVIEW
Sponsored membership at the Government Securities
Division (GSD) of FICC offers eligible clients the ability toengage in FICC-cleared cash lending and cash borrowing
transactions in U.S. Treasury and Agency Securities andoutright purchases and sales of such securities. Sponsoring
Members facilitate their sponsored clients’ GSD trading
activity and act as processing agents on their behalf for all
operational functions, including trade submission andsettlement with the CCP.

As part of an important expansion, approved by the US Securities and Exchange Commission (SEC) in March 2019,
FICC now permits all full service netting members of FICC/GSD (other than interdealer brokers (IDBs) acting in theircapacity as brokers) to participate in the Sponsored Service
as Sponsoring Members.
Sponsoring Members, at their discretion, have the ability to let their clients trade with counterparties other thanthemselves, providing sponsored members with the same
execution flexibility they have in the bi-lateral market today.

BENEFITSFICC has made it possible to bring a much larger
percentage of the market into clearing, while still
maintaining robust risk management standards:
The benefits include:■■

Eligible securities types include:■■

US Treasury Bills, Bonds and Notes■■

US Treasury Inflation Protected Securities (TIPS)■■

US Treasury STRIPS■■

Non Mortgage-Backed Agency Securities■■

Floating Rate Notes (FRNs)■■■■

Reduction of counterparty risk through CCP guarantee ofthe completion of settlement in a member default
scenario
Balance sheet and capital relief opportunities. Centrally
clearing these transactions at FICC could alleviate
constraints on Members by enabling them to reduce
capital usage via netting and lower risk weights in theirrisk-based capital ratios
Potential for growth of institutional investors’ on-loanbalances and income as borrowers shift their demand toCCP channels

HOW THE SERVICE WORKSSPONSORED MEMBER ELIGIBILITY

FICC’s risk management of the arrangement occurs
primarily at the Sponsoring Member level.

Any legal entity from an FICC-approved jurisdiction thatsatisfies the Qualified Institutional Buyer (QIB) standard
and has at least one Sponsoring Member willing to sponsor
it into FICC/GSD membership is eligible to participate inthe service as a Sponsored Member.

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All applications for Sponsoring Membership are decided
on by FICC Management and the FICC Board ofDirectors.
The Sponsoring Member is responsible to FICC for
posting all of the Clearing Fund associated with theactivity of the Sponsoring Member Omnibus Account,which is calculated twice daily on a gross basis (i.e., forClearing Fund calculation purposes, each SponsoredMember’s trading activity is VaR margined separately andthe sum of those total VaR charges is collected and heldby FICC separate from the Clearing Fund posted by theSponsoring Member for its proprietary activity).

FOR MORE INFORMATION
If you would like further information regarding FICC’s CCITor Sponsored DVP Repo services, please contact Client
Support at 1-212-855-7600, or by email at
rmsupport@dtcc.com.
Or visit us on the web at www.dtcc.com

While the Sponsored Members are principally liable to
FICC for their securities and funds-only settlement
obligations, the Sponsoring Member is required toprovide a guaranty to FICC with respect to all obligationsof its Sponsored Members, so that if a SponsoredMember does not satisfy any of its obligations to FICC,
FICC can invoke the Sponsoring Member’s guaranty.
Liquidity needs created by activity in the Sponsoring
Member Omnibus Account will be considered whencalculating the Sponsoring Member’s Capped Contingent
Liquidity Facility (CCLF) requirement

ABOUT DTCC
With 45 years of experience, DTCC is the premier post-trade market infrastructure for the global financial services industry. From operating
facilities, data centers and offices in 16 countries, DTCC, through its subsidiaries, automates, centralizes and standardizes the processingof financial transactions, mitigating risk, increasing transparency and driving efficiency for thousands of broker/dealers, custodian banks
and asset managers. Industry owned and governed, the firm simplifies the complexities of clearing, settlement, asset servicing, data
management and information services across asset classes, bringing increased security and soundness to financial markets. In 2017,
DTCC’s subsidiaries processed securities transactions valued at more than U.S. $1.61 quadrillion. Its depository provides custody andasset servicing for securities issues from 131 countries and territories valued at U.S. $57.4 trillion. DTCC’s Global Trade Repository service
maintains approximately 40 million open OTC positions per week and processes over one billion messages per month through its group oflicensed trade repositories. To learn more, please visit us at www.dtcc.com or connect with us on LinkedIn, Twitter, YouTube and Facebook.
Copyright © 2018 The Depository Trust & Clearing Corporation. All rights reserved. FICC is a clearing agency registered with and under the supervision of the Securities andExchange Commission (SEC). In light of its designation as a Systemically Important Financial Market Utility (SIFMU), FICC is also subject to oversight by the Federal Reserve.
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