Frontclear connects EMDC banks to global interbank markets and unlocks domestic markets by providing credit guarantees to cover a transacting institution’s counterparty credit risk, on the condition that local currency assets can be used for collateral management purposes.

Eligible Obligors | Frontclear guarantees the counterparty credit risk of Regulated financial institutions (banks & non-bank financial institutions) and financial infrastructure providers (central banks, central security depositaries, central clearing counterparties)

Geographic scope | All emerging and frontier economies

Instruments | Local currency repos, cross currency repo, spot FX, forward FX, FX swaps, cross currency swaps, interest rate swaps, NDFs, Letters of Credit and securities lending transactions

Guarantee | Frontclear guarantees payment of the close out amount upon the occurrence of a termination or default by the Obligor (on pari-passu or first loss basis). Further, subject to conditions, Frontclear is a buyer of last resort of collateral during the close-out procedure in certain transactions

Guarantee max notional | USD 50 m

Guarantee max percentage of deal size | Frontclear can guarantee up to 100% of the transaction exposure

Eligible collateral | For repo transactions: Government bills and bonds in hard or local currency. For swap transactions (CSA): USD cash, local currency cash, government bills and bonds

Minimum collateral terms | Haircuts determined on case-by-case basis for repo transactions. CSA terms for derivative trades are minimum weekly valuations, typically zero thresholds, and minimum transfer amounts of USD 250k

Eligible documentation | Frontclear primarily guarantees ISDA and GMRA based transactions but can deviate subject to certain conditions

Max portfolio duration | 18 months. Longer tenors can be considered on a case by case basis

The Frontclear Technical Assistance Programme (FTAP) builds on locally-driven needs analysis combined with thorough market due diligence to develop a tailored country programme aimed at addressing market development barriers. Country programmes span a wide range of activities including training and capacity building, regulator roundtables and advisory projects on ISDA and GMRA legal enforceability as well as market infrastructure development.

FTAP works closely with global and national expertise and under joint Frontclear/local leadership. For example, in country with central banks, capital markets authorities, bankers’ associations and ACIs. Globally through its FTAP Partnership Facility that pools financial and in-kind contributions for the private and not-for-profit sectors.