Clearing Corps Update Pact: Smoother Margins Ahead
Published Date: 7/11/2025
Notice
Summary
The Fixed Income Clearing Corporation (FICC) and Chicago Mercantile Exchange (CME) are updating their cross-margining agreement to make managing risks smoother and more efficient. This change affects traders and firms using both FICC and CME services, helping them reduce the money they need to set aside as margin. The new rules kick in soon, making the whole system safer and smarter without extra costs.
Analyzed Economic Effects
5 provisions identified: 3 benefits, 1 costs, 1 mixed.
Participating Affiliates Become Principals And Liable
The changes make a Participating Affiliate a principal on eligible positions and require each Participating Affiliate to promise to pay amounts owing and be jointly and severally liable up to the liquidation value of its positions and any margin securing them. The Common Member Agreement revisions also expand security interests so that FICC and CME can look to Participating Affiliates' positions and margin to satisfy joint clearing obligations.
Eligible Affiliate Positions Must Use Agent Omnibus Account
If you are a firm that uses both FICC and CME clearing, the rule requires any FICC-cleared positions for an Eligible Affiliate to be recorded in an Agent Clearing Member Omnibus Account. This ensures those affiliate positions at FICC are not netted against the Joint Clearing Member's proprietary positions, consistent with Rule 17ad-22(e)(6)(i).
Eligible Affiliates Limited to Non-Customers; Margin Not Segregated
The rule limits Eligible Affiliates to entities defined as Non-Customers and requires that margin posted to FICC for those Affiliate Accounts is not subject to segregation. This prevents Participating Affiliates from making claims under customer-protection regimes (like SIPA) that could reduce the property available to customers of a Joint Clearing Member.
Cross-Margining Access Preserved for Indirect Participants
The amended agreement is designed so Eligible Affiliates (indirect participants) can continue to participate in the FICC–CME cross-margining arrangement consistent with Rule 17ad-22 and the GSD Rules. The Commission noted that continuing cross-margining can provide capital and margin efficiencies and may facilitate access to clearing for indirect participants.
Termination Notice Extended from 30 to 180 Days
Either party to the cross-margining agreement must now give 180 days' prior written notice to terminate the Cross-Margining Arrangement instead of 30 days. FICC states this longer period gives more time to unwind cross-margining positions safely for FICC, CME, and Cross-Margining Participants.
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