SEC Approves FICC "Collateral-in-Lieu" Service for Treasury Repo Clearing

The SEC approved rule changes by the Fixed Income Clearing Corporation ("FICC") to address constraints that registered investment companies face in accessing the FICC's clearing services, including double margining issues, capital requirements associated with sponsoring member guarantees, and operational constraints on settlement payments.

The new rules establish a "Collateral-in-Lieu" ("CIL") offering within the FICC's Sponsored General Collateral ("GC") Service and expand the service to allow clearing of "done-away" trades. Under the new CIL Service, the FICC will take a lien on purchased securities in lieu of collecting margin from cash-lending sponsored members. The lien generally eliminates the need for the FICC to collect margin or Funds-Only Settlement Amount payments and removes the requirement for sponsoring members to guarantee obligations of CIL Funds Lenders. The FICC will require a minimum haircut of 2 percent of the contract value and may require additional clearing fund deposits in limited circumstances. The service accommodates transactions entered through joint trading accounts, allowing submission before final allocation to individual participants.

The rule changes also permit sponsoring members to submit done-away Sponsored GC Trades, where the sponsored member trades with a netting member other than its sponsoring member or another indirect participant. The FICC extended settlement deadlines for Sponsored GC Trades from 5:30 p.m. to 7:00 p.m. New York time to align with the close of the Fedwire Funds Service.

The SEC determined the changes are consistent with relevant Exchange Act Sections including 17A(b)(3)(F) and Rules 17ad-22(e)(4)(i), (e)(6), (e)(7), (e)(18)(iv)(C), (e)(19), and (e)(21).

The effective date is December 12, 2025.