SEC seeks comment on Treasury clearing

The Securities and Exchange Commission has opened two new public comment tracks as it rewrites how more U.S. Treasury trades must move through central clearing. (sec.gov) On April 20, SEC Commissioner Mark Uyeda said the agency had published for comment a request from the Securities Industry and Financial Markets Association, or SIFMA, and had reopened comments on an earlier request from the Institute of International Bankers, or IIB. The Federal Register published the SIFMA notice on April 22. (sec.gov) (federalregister.gov) Central clearing works like a middleman that steps between buyer and seller and guarantees settlement if one side fails. The SEC adopted the Treasury rule on December 13, 2023 to push more cash and repo trades into that system after years of concern about risk in a market with nearly $29 trillion outstanding. (sec.gov 1) (sec.gov 2) The original rule requires covered clearing agencies to make direct participants submit eligible secondary-market Treasury trades for clearing. Those trades include repo and reverse repo transactions by members, plus certain cash trades involving interdealer brokers and registered dealers. (federalregister.gov) (sec.gov) The current fight is over where that mandate reaches too far. SEC staff said this week they are still assessing failed trades, clearing-agency outages, and customer-protection questions that firms have called critical to getting ready. (sec.gov) SIFMA wants broader relief for internal trades between affiliates, especially repo used to move cash and collateral around a banking group. Its April 10 letter said the rule’s existing inter-affiliate exemption is so narrow that it is not workable for many firms. (sifma.org) (sec.gov) Under the current rule, an affiliate can avoid clearing an internal repo only if it meets specific status tests and clears all of its outward-facing repo trades. SIFMA asked the SEC to expand that relief to most GAAP-consolidated affiliates, excluding investment companies, and to use an activity-based threshold for some non-U.S. affiliate trades. (federalregister.gov) (sifma.org) IIB’s request covers a different edge case: trades done entirely outside the United States between non-U.S. institutions. The SEC first sought comment on that request in March after IIB argued that applying the clearing mandate to those transactions raises legal, operational, and time-zone problems for foreign firms that clear in the U.S. (federalregister.gov) (iib.org) The SEC has already slowed the timetable once. In March 2025, it pushed the compliance date for eligible cash trades to December 31, 2026, from December 31, 2025, and for eligible repo trades to June 30, 2027, from June 30, 2026. (federalregister.gov) Uyeda said the agency is trying to preserve market functioning while adding resilience, and the requests for comment show the rule is still being shaped before those deadlines arrive. The opening move is the same one the SEC made this week: ask the market where clearing should be mandatory and where it should stop. (sec.gov)