Federal Government Bonds (TPF) - Lending and Specific Repos

New solutions for trade registration and settlement processes.

B3 will provide Federal Government Bond (TFP) Lending and Specific Repos through the BTB system. The TPF lending market is an innovation, while the TPF repo market is an evolution of the OTC market existing at Selic.

In both cases, the custody of federal government bonds will remain with Selic and B3 will provide solutions focused on registration and settlement processes of centrally-cleared OTC trades.

Product Benefits

Greater safety

Credit risk equalization.

Trading benefits

Possibility for participants to settle only the net result only.

Optimization

Unified registration with the B3 Clearinghouse, thus eliminating the need to open counterparty credit limits. .

B3 Structure May Be Used to Trade TPF Lending and Specific Repos

Greater safety and optimization for registration and settlement.

How it works

In this environment, participants may secure settlement commitments, optimize capital allocation and allow equalization of counterparty credit risk in the market. All parties involved can now trade through B3’s multi-asset Clearinghouse, which uses the CORE (Close-Out Risk Evaluation) risk calculation methodology, one of the world’s most modern and safe risk systems.

Product features

Asset management for trading and settlement purposes will be led through a new RTC system module to mirror TPF balances of Selic and Cash accounts to the Clearinghouse structure.

Custodians will be responsible for requesting deposit, withdrawal or transfer of TPFs using their clients' deposit accounts, as well as cash deposit or withdrawal.
Through their custodians, investors must transfer the TPF balance to their Selic deposit account before carrying out lending trades or repo selling transactions.
Funds for repo purchase must be previously deposited with the Clearinghouse.
Direct Trade Execution – Participant (FTP/SP) enters a direct order with the information from the borrowing/buying investor and from the lending/selling investor, both under its responsibility.
Lender [Seller] Execution – Borrowing/buying Participant (FTP/SP) selects a lend/sell order. Available for Lending and Repos.