LCH SA Unlocks Treasuries as Collateral: Safer Trading or Just More Paper?
Published Date: 4/27/2026
Notice
Summary
LCH SA is planning to let its members use U.S. Treasury Notes, Bonds, FRNs, and TIPS as extra collateral to meet margin requirements. This change affects members of CDSClear, RepoClear, and DigitalAssetClear services and aims to make trading safer and more flexible. The update will kick in once all regulatory approvals are in place, helping members manage money better without extra costs right away.
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Analyzed Economic Effects
7 provisions identified: 1 benefits, 5 costs, 1 mixed.
U.S. Treasuries Added as Eligible Collateral
LCH SA proposes to let CDSClear, RepoClear, and DigitalAssetClear Clearing Members post U.S. Treasury Notes, Bonds, Floating Rate Notes (FRNs), and Treasury Inflation-Protected Securities (TIPS) as margin collateral. Eligible securities must have a remaining time to maturity of at least 3 days and at most 30 years. The change will take effect only after LCH SA obtains all required regulatory approvals.
Haircuts Added by Maturity Buckets
LCH SA will amend its Margin Eligible Securities Collateral and Haircut Schedule to add United States Treasury Notes/Bonds, FRNs and TIPS to the eligible list and apply haircuts by maturity buckets for those new collateral types. The Haircut Schedule will reflect the haircut amounts by maturity.
Minimum Issuance Size Requirement
To be eligible as margin collateral, each U.S. Treasury Note, Bond, FRN or TIPS issuance must have at least $500 million outstanding per issuance. Smaller-denomination issues under $500 million will not be accepted under this rule change.
Per-ISIN Concentration Limit Reduced
LCH SA is changing the concentration limit at the ISIN level for eligible issuers with an Internal Credit Score (ICS) of 1–4 from 25% to 20% of the ISIN's outstanding amount. This reduces how much of a single ISIN a Clearing Member or Clearing Member Group may pledge.
TIPS Concentration Cap of $2 Billion
LCH SA will set an asset-type concentration limit for TIPS of $2 billion at both the individual Clearing Member level and at the Clearing Member Group level. This caps the total TIPS that a member or member group may pledge.
Relative Concentration Limit Set at 100%
LCH SA will add a relative concentration limit expressed as a percentage of a Clearing Member's margin requirement; at go-live this limit will be set to 100%, meaning members could meet 100% of their collateral requirement using the full set of U.S. securities. LCH SA may later apply a different percentage to reduce exposure if liquidity conditions require it.
Certain Securities Remain Ineligible
LCH SA will continue to exclude zero-coupon instruments (except T-bills), stripped bonds, perpetual bonds, and securities subject to corporate-event features (for example, sinkable, puttable, and callable instruments) from eligibility as margin collateral.
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