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