Members of FICC’s Government Services Division use their GSD computer terminal connection or the RTTM Web Front End to access GSD’s automated collateral substitution facility. Since the bulk of repo trades are “blind-brokered” by Repo brokers, which means the two sides to the transaction do not know the identity of the other party, the broker must first receive the necessary information from the sell party in the trade. 然后经纪人可以在上午11点之前.m. EST to file a substitution notice that provides information about the repo trade to be substituted, including the original security involved and other aspects of the trade. 一旦GSD收到这个替换通知, clearance instructions are automatically created to receive the original collateral from the reverse party and deliver it back to the selling dealer. 在这个过程中, GSD only needs to know that a substitution is planned and that the original collateral has been returned. It does not need to know exactly what the substitute will be. Instead, GSD substitutes general collateral for any replacement allocations that may not arrive in time, which allows it to support the contract until the actual substitute collateral is in place.
By noon, participants must update their substitution request to tell the GSD precisely what replacement collateral they will assign to the repo. 这一信息一传达给GSD, its systems create final receive-and-deliver instructions to receive the replacement collateral from the repo dealer and deliver it to the party on the other side of the transaction. Participants who fail to notify GSD about substitution requests before noon must pay a fine and, 根据SEC的规定, any substitution requests or details that come in after 1 p.m. 要到第二天才会处理.
Substitution needs tend to increase at the end of each quarter when term repo transactions settle, prompting firms to recall securities they need to allocate to newly starting term repos or to satisfy outstanding firm sells.