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SIFMA Releases a Master Treasury Securities Clearing Agreement

"Firms are planning for the transition to Treasury clearing, and we are encouraging industry participants to identify which transactions they conduct today that are in scope for the clearing mandate, how those transactions will get cleared, how to manage margin risk and payment arrangements for transactions, and above all, to have a transition plan in place, with people, processes, and legal staffing."
Rob Toomey, SIFMA Managing Director and Head of Capital Markets
"Firms are planning for the transition to Treasury clearing, and we are encouraging industry participants to identify which transactions they conduct today that are in scope for the clearing mandate, how those transactions will get cleared, how to manage margin risk and payment arrangements for transactions, and above all, to have a transition plan in place, with people, processes, and legal staffing."
Rob Toomey, SIFMA Managing Director and Head of Capital Markets

SIFMA and SIFMA AMG developed and released a Master Treasury Securities Clearing Agreement to assist market participants with their "documentation needs" under new SEC rules requiring the clearance of Treasury securities transactions. The SEC rule is set to be fully implemented by June 2026.

SIFMA said that the 2024 SIFMA Master Agreement provides a comprehensive approach for clearing Treasury securities transactions and focuses on the role of clearing members in facilitating these trades. SIFMA said the agreement, developed with input from a "cross-section of the market involving broker-dealers and asset managers," was designed to standardize the clearing process while maintaining flexibility for clearing members and customers. SIFMA emphasized that the agreement is neither binding nor required, but should serve as a voluntary guide for clearing Treasury securities transactions. The Master Agreement includes key terms and conditions related to transaction initiation, confirmation and settlement between clearing members and customers.

Key provisions include:

  • Transaction Confirmation and Submission. Clearing members must promptly provide written confirmations detailing transaction specifics, such as purchased securities, buyer and seller information and pricing. Transactions must be submitted to the CCP within the agreed-upon deadlines.

  • Rejected Transactions. SIFMA outlined steps to handle transactions rejected by the CCP, including resubmission, bilateral processing, or unwinding of the transaction, depending on the terms agreed upon in the schedule.

  • Collateral and Security Interests. Customers grant clearing members a security interest in their rights to cleared transactions, collateral and other related assets. Clearing members are entitled to exercise rights under New York's UCC to secure these interests.

  • Event of Default. The agreement details actions to be taken in the event of customer default, such as terminating or liquidating transactions and exercising rights over collateral.

  • Termination of Agreement. Either party may terminate the agreement with one business days' notice, provided there are no outstanding transactions at the time of termination.

SIFMA also stated that it is developing "terms for 'done away' trading to allow for firms to execute transactions with a variety of dealers while clearing through a single entity, and to publish a playbook focused on operational issues that firms can use as they work through the transition."

Primary Sources

  1. SIFMA: News: SIFMA and SIFMA AMG Publish Master Treasury Securities Clearing Agreement
  2. SIFMA: 2024 SIFMA MASTER TREASURY SECURITIES CLEARING AGREEMENT: DONE-WITH

Tags

Regulated Activities
Central Clearing
Regulated Entities
Clearing Orgs.
Body of Law
Securities Law
Jurisdiction
US - Federal
Organization
Trade / Industry Associations
Sub-Author
SIFMA