State Street Peer-to-Peer Platform Executes First Repo

The concept of peer-to-peer trading has extended in repo with news that State Street’s Peer-to-Peer Repo programme, which 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, has executed its first transaction.

State Street says the trade was executed between a large asset owner and a non-traditional investment manager. The bank supports peer repo buyers by providing a guarantee against each peer repo seller’s default for all transactions that meet programme requirements.

“The buyside continues to seek greater control and optimisation of their trading opportunities and we are strategically committed to supporting the buyside community,” says 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 Programme only confirm the critical need for more sources of liquidity, and secured investment opportunities remain in high demand. 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.”

The programme is underpinned by a legal framework that enables each participant to act either as repo buyer and/or seller under a programme 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 programme agreements as well as from S&P Global Ratings, which affirmed that the agreements are consistent with 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,” says Leslie Womack, head of product development for Global Markets funding and collateral.