State Street Corporation announced the first transaction within its Peer-to-Peer Repo program following its launch earlier this year. The trade was executed between a large asset owner and a non-traditional investment manager.
The Peer to Peer repo program seeks to facilitate overnight and term repo trading between buy-side counterparties, including traditional and non-traditional asset managers, asset owners, insurers, corporates, REITS, and sovereign wealth funds. State Street supports peer repo buyers by providing a guaranty against each peer repo seller’s default for all transactions that meet program requirements.
“The buyside continues to seek greater control and optimization of their trading opportunities and we are strategically committed to supporting the buyside community,” said Gino Timperio, head of State Street Global Markets Funding and Collateral. “The market volatility we witnessed during the spring of 2020 and the greater than $1 trillion dollars enrolled in the Federal Reserve’s Reverse Repo Program only confirm the critical need for more sources of liquidity, and secured investment opportunities remain in high demand. We continue to prioritize our clients’ access to a broader range of trading counterparties, with peer-to-peer repo complementing our longstanding sponsored repo offering via the Fixed Income Clearing Corporation.”
The Peer-to-Peer Repo Program seeks to drive scale and flexibility in peer repo markets and beyond, by broadening buy-side access to liquidity and secured investment opportunities. It is underpinned by a legal framework that enables each program participant to act either as repo buyer and/or seller under a program Master Repurchase Agreement that sets out the terms under which participants trade bilaterally with one another.
“A key factor to structuring the product offering is the constructive input we received from a diverse group of clients on our program agreements as well as from S&P Global Ratings, which affirmed that the agreements are consistent with State Street’s guaranty meets its principles for credit substitution such that the credit quality of an agreement with of an unrated counterparty would be based on the credit rating of State Street as guarantor,” said Leslie Womack, head of product development for Global Markets Funding and Collateral. “This is an exciting milestone for the Global Markets Funding and Collateral team, and we look forward to continuing to partner with our clients to advance the tools they need to more seamlessly manage their financing, collateral management, securities lending, and digital opportunities.”
Source: State Street