SIFMA and EY Publish Guidance on Treasury Clearing Rule
Commentary by Steven Lofchie
In a new guide for sell-side and buy-side market participants, SIFMA and EY offered both insights and practical considerations to prepare for upcoming SEC Treasury Clearing Rule compliance dates.
Key compliance dates extend from March 2025 to June 2026, with expectations for firms to prepare for clearing mandates and revise operational, technology and risk frameworks.
The report is divided into 11 chapters, including an Executive Summary, and 10 chapters on specific topics from margining to done-away to capital issues. Each chapter of the report provides an overview of the steps that must be taken by FICC, by clearing members and by their customers/counterparties to implement the clearing mandate.
Commentary
This is an excellent report with much useful, practical detail. Anyone involved with the implementation of any aspect of the clearing mandate should read at least the section of the report relevant to that issue.
One clear takeaway: there is substantial complexity to this project and numerous moving pieces that must be put into place in order for the mandate not to damage the market for US government securities.
Another takeaway: assuming the project can be completed (whether on time or on a delayed basis), it remains unclear how the market is benefitted.
Related Articles
-
The Fixed Income Clearing Corporation proposed rule amendments that are intended to make effective the SEC's recent adoption of requirements that members of a central clearing organization for US government securities clear certain repo and cash market trades in US governments.
-
The SEC adopted final rules on (i) the mandatory clearing of transactions in Treasury securities and (ii) the application of the broker-dealer customer protection rule to Treasury securities.
-
The SEC adopted a rule that any SEC-registered central clearing agency that provides central clearing of U.S. Treasury securities ("USTs") shall require its members to centrally clear (i) most repurchase and reverse repurchase transactions in USTs to which it is a counterparty and (ii) certain cash market purchases and sales of USTs.
