According to BME Clearing, the agency model and the principal-to-principal model will contribute to greater capital efficiency and market liquidity.
The agency model will allow clients to directly posts margins in the CCP, while the clearing member will act as an operational agent and will be jointly liable with the client before the CCP.
BME Clearing explained: “Margins posted by the client are not the balance sheet of the clearing member.”
So far, 16 clients have opened accounts that follow the agent model for the repo segment.
To follow the principal to principal model, a client has to be a direct counterparty with the clearing member.
The clearing member will be a counterparty with the CCP — the clearer being solely liable before the CCP.
BME Clearing said: “With this offer to all institutional clients multilateral netting is facilitated and capital efficiency is improved as well as market liquidity.”