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MTS launches Global Collateral Management segment for D2C Repo trading

First Published 1st June 2017

New service streamlines dealer and client trade flows via RFQ trading protocol
. LCH signs as first buy-side trading client.

Bruce Kellaway, LCH Group

Bruce Kellaway, LCH Group

MTS has launched its new dealer-to-client (D2C) Global Collateral Management (GCM) segment for the repo market on MTS BondVision UK. Clearing house LCH has signed up as its first buy-side client.

MTS has a presence on the dealing desks of over 100 sell-side institutions and at over 400 buy-side institutions. This enables it to help buy-side clients seeking access to balance sheet in an environment of reduced collateral availability and increased regulatory burden through MTS BondVision UK.

The dealer axe pages can help highlight dealer inventory, linking to interdealer quotes to enable axe integrity.

To address the demand for a flexible collateral management system, MTS will offer an RFCQ trading mechanism alongside a trade registration facility.

New features include:

  • RFCQ efficiencies through automation: clients can send single line or "list" RFCQs to their dealers, with an import function to allow easy upload of bond portfolios
  • Straight through processing: dealers benefit from existing STP efficiencies, with trades co-mingled in their current blotter, whilst clients benefit from a full audit trail for proof of best execution
  • Flexible tri-party baskets: MTS will list participants' bespoke tri-party baskets, with visibility restricted to approved dealer-client combinations
  • Full control of streaming of indicative quotes for dealers: dealers can stream axes, linked to their interdealer market quotes, to their configured clients on a proposal by proposal basis, directing them to relevant pools of liquidity and leading to improved access to funding and pricing
  • Highly granular credit line matrix: full control over trading counterparties with credit lines configurable by counterparty and instrument class with max tenor limits for each line and haircut capabilities

Bruce Kellaway, Global Head of RepoClear, EquityClear and Collateral at LCH Group said: "MTS's new Global Collateral Management system will allow us to deliver greater efficiencies in our treasury and collateral operations at LCH. Alongside our members, we are active users of the repo market and the increased flexibility offered through the new segment will deliver additional opportunities for execution for our investment activity. LCH continues to work on the development of a new model to allow high quality buy-side firms to use RepoClear, subject to regulatory approval, which will also improve liquidity for market participants and offer them greater access to risk management tools. The new dealer to client functionality offered by this GCM tool will be of value in this regard."