Last month, on July 10, 2018, the Office of Financial Research (“OFR”), an agency of the U.S. Department of the Treasury, proposed a new rule that would require collection of data with respect to centrally cleared repurchase agreement transactions (“repos”) (the “Proposed Rule”).  The proposal stems from a multi-year effort by the Financial Stability Oversight Council (“FSOC”) to expand and make permanent the collection of repo data.

The Proposed Rule seeks to enhance the ability of FSOC and OFR to identify and monitor risks to financial stability, as well as support the calculation of certain reference rates for repos.  Particularly for the calculation of certain reference rates, OFR asserted that the new data from the Proposed Rule would support and enhance the calculation of both the Secured Overnight Financing Rate (“SOFR”) and the Broad General Collateral Rate (“BGCR”).

The Proposed Rule itself would require the submission of information by central counterparties with average daily total open repo commitments of at least $50 billion.  The proposed collection has three schedules:  the first covers details on general collateral trades, the second covers details on the securities used to collateralize net positions in general collateral repo, and the third covers specific-security trades.  Additionally, the Proposed Rule would use the Federal Reserve Board as collection agent for the data, with the data submitted directly to the Federal Reserve Bank of New York.

Currently, only two services of the Fixed Income Clearing Corporation (“FICC”) would meet the Proposed Rule’s qualifications:  the GCF Repo Service (a general collateral repo service) and the DVP Service (a specific-security repo service).  However, OFR asserted that other firms could meet the eligibility criteria for reporting in the future.

OFR is accepting comments on the Proposed Rule until September 10, 2018.  View the Proposed Rule here.

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