SEC clears Treasury cross‑margining
The SEC approved an exemptive order and proposed rule change allowing customer cross‑margining between cleared Treasury cash positions and futures in the U.S. Treasury market, subject to conditions. The move is intended to let margin be calculated across those positions within the same account. (reuters.com)
The Securities and Exchange Commission on April 15 cleared a new way to net risk across cash Treasuries and Treasury futures in one customer account. (sec.gov) In plain terms, margin is the cash or collateral a trader posts against potential losses, and cross-margining lets offsetting positions reduce that total. The order covers cash U.S. Treasury positions cleared at the Fixed Income Clearing Corporation and Treasury futures cleared at Chicago Mercantile Exchange clearing entities. (sec.gov) The Securities and Exchange Commission said the relief is conditional and paired it with approval of a proposed rule change tied to the Fixed Income Clearing Corporation and Chicago Mercantile Exchange arrangement. The agency said the setup permits customer cross-margining only when the cash and futures positions are carried in the same account. (sec.gov; sec.gov) The timing matters because the Treasury market is moving toward broader central clearing under rules the Securities and Exchange Commission adopted in December 2023. The commission later extended the compliance deadlines to December 31, 2026 for cash transactions and June 30, 2027 for repurchase agreement transactions. (sec.gov; sec.gov) That clearing push followed the March 2020 Treasury market breakdown, when trading conditions deteriorated and regulators began pressing for tighter risk controls and more central clearing. The Treasury Clearing Implementation page says the 2023 rules were designed to reduce risk and improve operational efficiency in eligible secondary-market Treasury trades. (federalreserve.gov; sec.gov) The customer program expands a narrower version already in place for firms’ own positions. Chicago Mercantile Exchange and the Fixed Income Clearing Corporation said an enhanced house-account program went live in January 2024, and the customer expansion had been pending regulatory approval. (dtcc.com; cmegroup.com) The two clearing groups said on April 16 that the expanded service will start on April 30 for end-user clients of dually registered broker-dealers and futures commission merchants that are common members of both clearinghouses. They said the aim is to give those clients capital and margin efficiencies when they clear U.S. Treasury securities and Chicago Mercantile Exchange interest-rate futures together. (cmegroup.com) Chicago Mercantile Exchange says the joint program can produce margin and capital savings of as much as 80% for eligible positions held with a common clearing member, though actual savings depend on the portfolio. The Securities and Exchange Commission order, by contrast, focused on customer-protection conditions around how Treasury positions and related customer assets can be held from trade novation through settlement. (cmegroup.com; sec.gov) The commission’s release frames the change as a narrower plumbing fix inside the Treasury market’s clearing overhaul, not a rewrite of who must clear. The next test is whether dealers, futures commission merchants, and clients actually use the new account structure before the 2026 and 2027 clearing deadlines arrive. (sec.gov; sec.gov)
