SEC Eases Rules for Treasury Trade Clearing—Boring Bureaucracy Alert
Published Date: 4/22/2026
Notice
Summary
The SEC is asking to ease some rules for companies that clear U.S. Treasury securities trades, like FICC and CME. These companies usually must make sure all eligible trades get submitted for clearing, but the SEC wants to allow some exceptions to help them manage risks better. People can share their thoughts on this change before a deadline, and it could affect how quickly and smoothly these trades get processed.
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Analyzed Economic Effects
3 provisions identified: 2 benefits, 1 costs, 0 mixed.
Expand Inter‑Affiliate Exclusion to More Affiliates
A trade association asked the SEC to allow all affiliates (except investment companies as defined in section 3 of the Investment Company Act of 1940, 15 U.S.C. 80a-3) to rely on the Inter-Affiliate Exclusion so they can enter into uncleared repo transactions with a direct participant. The request explicitly names potential affiliates such as swap dealers and holding company entities and says this would let those affiliates manage liquidity and collateral without clearing-related delays and margin costs.
10% Threshold for Non‑U.S. Affiliate Repos
The trade association asked the SEC to exempt repo transactions between non-U.S. affiliates and non-U.S. counterparties from the outward-facing condition when the quotient of (i) uncleared repos between a firm's non-U.S. affiliates and non-U.S. external counterparties divided by (ii) the sum of that numerator plus all cleared repo transactions of the firm's direct participants is less than 10 percent. The association asked that the ratio be calculated as an average of outstanding daily open notional balances over each of the last three quarters, with more weight on more recent quarters, and proposed that firms report if they materially exceed the 10% threshold and that the Commission could impose a limited clearing requirement after repeated exceedances.
Clearing Requirement Raises Costs and Operational Risk
The trade association stated that requiring affiliates to centrally clear inter‑affiliate repo transactions would force both sides of those trades to post margin, gross up a group's exposure to a clearing agency, make affiliate transactions more expensive, and could constrain a direct participant's capacity to clear third‑party repo activity. The association also said that mandatory affiliate clearing could cause delays in providing liquidity when U.S. Treasury securities clearing agencies are closed, especially for non‑U.S. affiliates operating in other time zones.
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