In embonds every transaction is settled through the central counterparty (CCP) which is ICBC Financial Services LLC, a US broker dealer specializing in clearing and settlement.
Once there is a match on the platform, both the buyer and the seller face the CCP for the DVP settlement of the transaction. The buyer and seller are never directly exposed to each other.
Part of the on-boarding process is establishing limits with the CCP, a process fully managed by embonds. The DVP pre-settlement limits are issued by the CCP and are utilized until a transaction has settled. The limit system is put in place in order for the CCP to manage it’s exposure to the participants on the embonds platform. embonds enforces these limits such that a participant’s unsettled transactions do not exceed the limit set by the CCP.
At present there is no margin requirement to use the CCP. Participants may however post margin with the CCP to increase limits.
The fees for the CCP are paid by embonds and participants are not required to have a separate fee agreement with the CCP.