System and method facilitating tri-party repurchase agreement transactions
In accordance with at least one embodiment of the invention, a DVP repo and tri-party repo hybrid transaction is provided as well as a process for facilitating and processing such a hybrid transaction, referred to herein as a “tri-party hybrid repo” transaction.
1. A computer-implemented method for providing collateral management service for tri-party hybrid repo transactions, the method comprising:
receiving, at a repo service provider, instructions specifying a tri-party hybrid repo transaction as well as a payable date for the tri-party hybrid repo transaction;
on or prior to the payable date, the repo service provider provides confirmation to a buyer/investor for the tri-party hybrid repo transaction that collateral that is the subject of the tri-party hybrid repo transaction has been received in the buyer/investor's Securities Account at the Federal Reserve Bank via the Fedwire Securities Service and free of payment or versus payment; and
on or prior to the payable date, the repo service provider provides confirmation to the buyer/investor that collateral has been returned to a broker/dealer/seller for the tri- party hybrid repo transaction via the repo service provider versus payment via the Fedwire Securities Service,
wherein said instructions are received in a computer processor over a computer network connection,
wherein an indication of said receipt of said collateral that is the subject of the tri-party hybrid repo transaction is stored in a database arranged in a memory coupled to the computer processor, and
wherein an indication of said return of said collateral to the broker/dealer/seller for the tri-party hybrid repo transaction via the repo service provider is stored in the database.
2. The method of claim 1 , wherein the buyer/investor receiving collateral positions versus payment or free of payment further comprises:
the repo service provider allocating the broker/dealer/seller's collateral for transfer to the buyer/investor's Securities Account;
the repo service provider transferring the collateral positions via the Fedwire Securities Service to the buyer/investor's Securities Account at the Federal Reserve Bank.
3. The method of claim 2 , further comprising, subsequent to the allocation of the collateral to the buyer/investor, periodically reporting collateral positions to the buyer/investor via the computer network.
4. The method of claim 1 , wherein the buyer/investor returning the collateral to the broker/dealer/seller further comprises transferring the collateral back from the buyer/investor's Securities Account to the repo service provider's Securities Account number versus crediting by the repo service provider of the transaction proceeds to the buyer/investor's DDA at the repo service provider.
5. The method of claim 1 , wherein the broker/dealer/seller is paid out of the buyer/investor's demand deposit account (DDA) at the repo service provider.
6. The method of claim 1 , wherein, prior to the payable date of the tri-party hybrid repo transaction, the tri-party repo transaction becomes a delivery repo transaction.
7. The method of claim 1 , further comprising opening a demand deposit account (DDA) for the buyer/investor at the repo service provider.
8. The method of claim 1 , further comprising designating a Securities Account at the Federal Reserve Bank for facilitating delivery repo transactions for the buyer/investor.
9. The method of claim 1 , wherein the collateral that is the subject of each tri-party hybrid repo transaction is available for view and download over the computer network via at least one of an information access system and a delivery portal implemented by the repo service provider.
10. The method of claim 1 , wherein the receipt of instructions specifying a tri-party hybrid repo transaction further comprises matching instructions from the buyer/investor and the broker/dealer/seller in the computer processor.
11. The method of claim 1 , wherein return of the collateral via delivery repo appears as a tri-party unwind for the broker/dealer/seller.
12. The method of claim 1 , wherein the buyer/investor for the tri-party hybrid repo transaction receives the collateral prior to the payable date.
13. The method of claim 12 , wherein the investor returns the collateral to the dealer on the payable date.
14. The method of claim 1 , wherein the buyer/investor for the tri-party hybrid repo transaction receives said collateral that is the subject of the tri-party hybrid repo transaction prior to the payable date, and
wherein the buyer/investor returns collateral to the broker/dealer/seller for the tri-party hybrid repo transaction on the payable date.
15. The method of claim 14 , wherein the buyer/investor receiving collateral positions versus payment or free of payment further comprises:
the repo service provider allocating the broker/dealer/seller's collateral for transfer to the buyer/investor's Securities Account;
the repo service provider transferring the collateral positions via the Fedwire Securities Service to the buyer/investor's Securities Account at the Federal Reserve Bank.
16. The method of claim 15 , further comprising, subsequent to the allocation of the collateral to the buyer/investor, periodically reporting collateral positions to the buyer/investor via the computer network.
17. The method of claim 14 , wherein the buyer/investor returning the collateral to the broker/dealer/seller further comprises transferring the collateral back from the buyer/investor's Securities Account to the repo service provider's Securities Account number versus crediting by the repo service provider of the transaction proceeds to the buyer/investor's DDA at the repo service provider.
18. The method of claim 14 , wherein the broker/dealer/seller is paid out of the buyer/investor's demand deposit account (DDA) at the repo service provider.
19. The method of claim 14 , wherein, prior to the payable date of the tri-party hybrid repo transaction, the tri-party repo transaction becomes a delivery repo transaction.
20. The method of claim 14 , further comprising opening a demand deposit account (DDA) for the buyer/investor at the repo service provider.
21. The method of claim 14 , further comprising designating a Securities Account at the Federal Reserve Bank for facilitating delivery repo transactions for the buyer/investor.
22. The method of claim 14 , wherein the collateral that is the subject of each tri-party hybrid repo transaction is available for view and download over the computer network via at least one of an information access system and a delivery portal implemented by the repo service provider.
23. The method of claim 14 , wherein the receipt of instructions specifying a tri-party hybrid repo transaction further comprises matching instructions from the buyer/investor and the broker/dealer/seller in the computer processor.
24. The method of claim 14 , wherein return of the collateral via delivery repo appears as a tri-party unwind for the broker/dealer/seller.