Treasury clearing under scrutiny
- U.S. regulators are probing operational risks tied to mandatory Treasury clearing, including failed trades and outages. - SEC commissioner Mark Uyeda said staff are reviewing failed trades, clearing-agency outages, and customer-protection considerations. - The review focuses attention on margin, collateral and outage workflows as firms prepare for new clearing rules (regcompliancewatch.com).
The Securities and Exchange Commission is scrutinizing how mandatory clearing in the $29 trillion U.S. Treasury market would work when trades fail or a clearinghouse goes down. (sec.gov) SEC Commissioner Mark Uyeda said on April 20 that agency staff are reviewing failed-trade treatment, clearing-agency outages and customer-protection questions that firms have flagged as they prepare for the rule. (sec.gov) Treasury clearing means a central counterparty steps between buyer and seller, collects margin and manages settlement if one side defaults; the SEC adopted the rule on Dec. 13, 2023 to push more cash and repo trades into that system. (sec.gov) The compliance clock was later pushed back by one year. Eligible cash trades now face a Dec. 31, 2026 deadline, and eligible repurchase-agreement trades face a June 30, 2027 deadline. (sec.gov) Those dates have turned operational details into a regulatory issue. Firms need to know whether margin must be posted on a gross or net basis, how collateral moves during stressed conditions, and what happens if a required trade cannot be cleared because the utility is unavailable. (sec.gov) The main utility in this market has been the Fixed Income Clearing Corporation, part of Depository Trust & Clearing Corporation, and JPMorgan said in October 2025 that CME Securities Clearing had also become a Securities and Exchange Commission-approved clearing agency for U.S. Treasury cash and repo trades. (dtcc.com) (jpmorgan.com) Industry groups have pressed for narrower scope and more flexibility. Uyeda said the SEC has already sought comment on a Securities Industry and Financial Markets Association request to modify the rule’s inter-affiliate exemption. (sec.gov) The commission and the Commodity Futures Trading Commission also approved a framework this month for customer cross-margining between cleared Treasury cash positions and Treasury futures, a step aimed at reducing duplicate margin demands across markets. (sec.gov) Uyeda said the SEC has been working with domestic and foreign regulators and with market participants to answer implementation questions before the new deadlines arrive. For now, the agency’s focus is on whether the plumbing can keep running when the Treasury market is forced to rely on it more heavily. (sec.gov)
