State Street’s peer-to-peer repo programme confirms first trade

The programme, which was launched earlier this year, looks to make overnight and term repo trading between counterparties easier.

Following the launch of State Street’s peer-to-peer repo programme earlier this year, the financial services company has confirmed the first transaction under the programme.

The trade is said to have been executed between a large asset owner and a non-traditional investment manager.

The peer-to-peer repo programme looks to make overnight and term repo trading between counterparties easier, including that of traditional and non-traditional asset managers, asset owners, insurers, corporates, REITS, and sovereign wealth funds.

It also aims to improve the scale and flexibility in peer repo markets by increasing buy-side access to liquidity and secured investment opportunities.

“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,” said Gino Timperio, head of State Street Global Markets Funding and Collateral.

“We continue to prioritise 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.”

State Street said it supports peer repo buyers by providing a guaranty against each peer repo seller’s default for all transactions that meet programme requirements. The credit quality of an agreement with an unrated counterparty is based on the credit rating of State Street as guarantor.

The peer-to-peer repo programme is supported by a legal framework which allows participants to act as either repo buyer and/or seller under a programme Master Repurchase Agreement. The agreement provides participants with the terms under which they can trade bilaterally with one another. 

Leslie Womack, head of product development for Global Markets Funding and Collateral at State Street, said a key factor to structuring the product offering was the constructive input it received from a diverse group of clients on its programme agreements as well as from S&P Global Ratings.