Euroclear USD DVP repo

The Euroclear USD Treasury Delivery-Versus-Payment (DVP) repo Administrative Service provides repo market participants many of the advantages and operational efficiencies associated with traditional US Triparty repo with the addition of real-time settlement and the ability to diversify custody depository exposure. One simple administrative agreement with Euroclear is all that’s needed, meaning there is no need to change existing documentation with counterparties or custodians. Simple to set up, easy to use!

Euroclear’s USD DVP repo service is an administrative service for repo market participants, providing an alternative to US triparty repo that only settles at end-of-day, with real-time settlement and many other triparty repo benefits.  The service works seamlessly with existing trade execution and custody arrangements. 

Key features of the service

• Provides real-time settlement resulting in enhanced risk management and trade economics. 
• A full outsourcing to Euroclear of all initial trade and lifecycle events, such as substitutions and coupons, providing the same convenience as triparty repo. The service supports both buyers and/or sellers.
• Supports one-sided administration. It does not require both the buyer and seller to use the service. 
• Freedom of choice of custodian in any jurisdiction.
• Supports Fixed Income, Currencies and Commodities (FICC) clearing for both netting and sponsored FICC members.
• Euroclear is not a party to the buyer’s and/or seller’s Global Master Repurchase Agreements (GMRAs)/MRAs which do not need to be amended for the use of the service, minimising setup.
• Instead, the service is governed by a single non-depository administrative service agreement with the buyer and/or seller.
• The service improves the efficient movement of US Treasuries in other markets too such as EU/UK/APAC.

Euroclear’s USD DVP service can accommodate trade confirmations from the major trading platforms in many electronic forms, including voice and voice assisted confirmations, client file messaging protocols including MQ messaging and email, as well as the more traditional formats. Once instructed, Euroclear completes pre-settlement trade compliance checks and if the compliance review fails Euroclear contacts the counterparty for trade compliance repair. When compliance checks are successfully Euroclear creates the settlement instructions and manages the trade throughout its lifecycle.

The USD DVP service supports one-sided administration as it does not require both the buyer and seller to use the service. The party not using the service simply needs to instruct their custodian directly, as they do for all their existing repo trade, rather than have Euroclear take care of it. If the repo seller is a FICC sponsoring member it simply novates both repo legs to FICC for cleared repo. 

Unlike collateral management services that settle on an end-of-day basis, USD DVP provides real-time settlement resulting in enhanced risk management and trade economics by reducing intra-day financing needs and use of credit lines. The service is backed by comprehensive reporting integrated into existing accounting systems to make sure everyone stays in control at all times.

Like US Triparty repo, the USD DVP service provides full outsourcing of all buy-side repo lifecycle management functions, from compliance checking pre-trade, settlement, seamless margining, substitution, coupon payment management and corporate events throughout the trade lifecycle. 

Euroclear USD DVP repo provides sell-side repo counterparts an alternative to USD triparty repo settling on an end-of-day basis. Euroclear's service's post execution trade lifecycle management with real-time securities settlement provides material benefits to repo sellers, whilst also expanding the population of potential buy-side repo counterparties also using the service.