MBS988-21 FICC - MBS Service Updates Capped Contingency Liquidity Facility (“CCLF®”) Reset Reminder Posted
TL:DR I believe the DTCC realizes the Fed changes yesterday require a third option for members that will no longer be eligible under the updated Bank Discount Window Requirements but wants to make damn sure any sort of firm failure losses is spread out amongst all members.
MBS988-21 was published today on the DTCC's page.
MBS988-21 for those who don't want to click the link
As a smooth brain reading this, and of course, trying to connect to this to my favorite stock, but not knowing what anything means, I decided to look up what each bit of the opening paragraph means--understanding some sort of reset occur 7/1.
First, who are the members this notice is addressed to? Futzing around, I believe I found a member directory (only current as of 9/28/20).
The usual suspects are here, with some highlights including BlackRock, Inc., BOFA Securities, Inc., Citadel Global Fixed Income Master Fund Ltd., Citadel Securities LLC, Citibank, N.A., Goldman Sachs & Co. LLC, etc.
OK, so this smooth brain now has an idea who it is addressed to--hooray!
Next, what is the Mortgage-Backed Securities Division (“MBSD”)?
I think I'm starting to get a clue
Ok, so I believe this is a notice from the 'Regulator' in charge of 'assessing risk' and 'providing trade settlement data' addressed to Citadel and company.
Next, what the hell is the Capped Contingency Liquidity Facility (“CCLF®”)?????
'firm fails' is an instant tit jacker for this Ape
What about the 3 options talking about the Federal Reserve Discount Window? Well, looking at the Fed, they released an announcement on 6/1:
New requirements tightening the screws?
So what does it all mean? I think the DTCC realizes the changes the Fed made yesterday are about to leave their members ineligible from taking part in the Fed's markets due to updated collateral requirements.
As such, they are creating a third option for these now ineligible participants bound by the CCLF wind-down plan should they fail so losses are spread amongst all members.
The CCLF requirements are being reset 7/1 and will continue to be reset each month moving forward.
TL:DR I believe the DTCC realizes the Fed changes yesterday require a third option for members that will no longer be eligible under the updated Bank Discount Window Requirements but wants to make damn sure any sort of firm failure losses is spread out amongst all members.