CDS Clearing and Depository Services Inc. is seeking comment on planned changes to funding and collateral requirements for firms participating in the New York Link service.
In Friday’s OSC Bulletin, the clearing agency is seeking comment on plans to expand collateral requirements for participants in these services due to changes initiated by the National Securities Clearing Corp. in the United States.
Effective November 1, CDS sponsored participants in the New York Link service will be required to pledge all risk based margin related collateral directly with NSCC. Currently this collateral is held by CDS. Since CDS will no longer have access to the collateral it will require NYL participants to pledge additional collateral to it, effectively doubling the risk based margin collateral requirement for each participant.
CDS will also establish an NYL participant fund and a DTC Direct Link participant fund, requiring both DDL participants and NYL participants to post collateral, that is intended “to provide collateral to meet day to day liquidity requirements resulting from the default of a participant.”
Those funds will be established “with a total value equal to the largest debit cap allocated to any participant using the related service”, which it reports is currently US$60 million for NYL participants and US$40 million for DDL participants.
Comments on the proposed changes are due in 30 days, and they are expected to be implemented by Nov. 1.
http://www.oscbulletin.carswell.com/bb/osc/bb/3233/on3233.htm#13_1_2
New collateral requirements threaten CDS service
July 5, 2009
http://www.investmentexecutive.com/client/en/News/DetailNews.asp?Id=49976&cat=147&IdSection=147&PageMem=&nbNews=
CDS proposes new collateral requirements for New York Link
Changes initiated by the U.S. National Securities Clearing Corp.
- By: James Langton
- August 16, 2009 August 16, 2009
- 14:50