SEC Greenlights FICC-CME Margin Rule Tweaks for Brokers
Published Date: 4/20/2026
Notice
Summary
The Fixed Income Clearing Corporation (FICC) and Chicago Mercantile Exchange (CME) teamed up to update their cross-margining agreement, making it easier for certain broker-dealers to manage their customer positions across both platforms. These changes speed up processes and improve rules, helping members save money and reduce risks. The new rules got fast-tracked approval and will take effect soon, so affected firms should get ready to benefit!
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Analyzed Economic Effects
4 provisions identified: 2 benefits, 1 costs, 1 mixed.
Customer Subordination of SIPA Claims
To participate in customer cross‑margining, Cross‑Margining Customers must sign a Subordination Agreement agreeing that their cross‑margined positions and associated margin will not receive customer treatment under the Exchange Act or the Securities Investor Protection Act of 1970 (SIPA) and will not be treated as 'customer property' under 11 U.S.C. 741 in a liquidation of the Clearing Member. The Customer Agreement expressly subordinates such SIPA or bankruptcy claims to the claims of other customers as described in the Third A&R Agreement.
How Customer Margin Is Held and Used
Cross‑Margining Customer margin would be credited to a Cross‑Margining Customer Margin Custody Account and treated as financial assets in a securities account under New York's Article 8 (NYUCC). FICC would hold these margins in segregated accounts at an FDIC‑insured bank and at the Federal Reserve Bank of New York (FRBNY), but the Customer Agreement also requires customers to accept that their funds will be held in a 'futures account' and may be commingled and used by the Eligible BD‑FCM to carry futures customer positions.
Customer Cross‑Margining Extends Savings
FICC and CME expanded cross‑margining to allow certain broker‑dealers (Eligible BD‑FCMs) to cross‑margin their customers' cleared positions. Margin reductions would be calculated customer‑by‑customer for combined FICC and CME portfolios and, when applicable, reduced by the lower of the two organizations' percentages subject to a cap of 80%. This creates capital efficiencies for cross‑margining participants and their customers by lowering margin requirements when offsets exist.
Customer Protections in Default Handling
Under the amended agreement, Customer Positions and Proprietary Positions would form separate 'Liquidation Portfolios' and would not be netted against one another when calculating Net Gain or Net Loss. The Clearing Organizations would not be able to apply Customer Positions or associated margin to obligations from a Defaulting Member's Proprietary Positions, and the agreement allows customer positions to be 'ported' to another clearing member in a default scenario.
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