The National Settlement Depository (NSD), a non-bank financial institution and central securities depository, has begun the testing phase of a new collateral management service for over-the-counter (OTC) repos together with Bloomberg, exploring interactions with the informational and tri-party services, per a NSD statement.
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The initial testing began earlier this month, occurring in part with the Moscow Exchange Group’s (MOEX) services. The newly tested service will eventually help foster and enable more streamlined processing of repo transactions with securities baskets.
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This is achieved by leveraging the NSD’s existing collateral management system – opting for the NSD’s system was important as it is similar in nature to the functionality being deployed for repos with the Bank of Russia, Federal Treasury and for other on-exchange repos, with general collateral certificates.
For its part, Bloomberg boasts some of the most extensive data and analytics capabilities in the market. Together with the NSD, the new tri-party service will emphasize improved reliability and overall convenience in the execution of repo transactions.
As such, this will include several new features such as collateral for transactions formed on an individual basis. Moreover, on the new tri-party service, securities will be able to be substituted within the term of the transaction, possessing better access to the system via NSD’s Web-Client.
Finally, the new service will come equipped with mark-to-market and margining, as well as automated reporting on transactions to the NSD Repository. Currently the NSD and Bloomberg are targeting a commercial launch of the service for March 2017.