SEC Seeks Input on Flexible Rules for U.S. Treasury Trade Clearing
Published Date: 4/22/2026
Notice
Summary
The SEC is asking for feedback on a request to ease some rules for companies that clear U.S. Treasury securities trades. These changes affect big financial firms that handle these trades, giving them more flexibility on how they report certain transactions. This could impact how quickly trades get processed and might save some money on compliance starting soon after approval.
Analyzed Economic Effects
5 provisions identified: 2 benefits, 2 costs, 1 mixed.
Potential Systemic and Operational Risks
The trade association said increased affiliate clearing could raise the systemic importance of U.S. Treasury securities clearing agencies and add operational complexity. They warned that if affiliates cannot move Treasuries quickly (for example when a clearing agency is closed), that could create liquidity problems, especially for non-U.S. affiliates operating in other time zones.
Expand Inter-Affiliate Exemption
A trade association asked the SEC to let almost all affiliates (except investment companies) rely on the Inter-Affiliate Exclusion so they would not have to clear repo trades through a U.S. Treasury securities clearing agency. If granted, affiliated entities could do uncleared repo transactions with their direct participant, which the association says would reduce clearing costs and speed internal liquidity and collateral moves.
Clearing Could Gross Up Affiliate Exposure
The trade association warned that requiring affiliates to clear repos would create exposures to a clearing agency for both sides of inter-affiliate trades, grossing up the group's reported exposure and forcing both affiliates to post margin. They said this could make affiliate transactions more expensive and could reduce a firm's capacity to clear third-party repo activity.
10% Threshold for Non-U.S. Affiliate Repos
The trade association asked the SEC to exempt repo trades between non-U.S. affiliates and non-U.S. counterparties from the outward-facing clearing condition if such uncleared activity is under 10 percent of a firm's combined cleared repo activity and those uncleared transactions. They propose measuring this as the average of outstanding daily open notional balances over the last three quarters, with more weight on recent quarters, and excluding repos between two non-U.S. affiliates from the calculation.
Reporting if 10% Threshold Is Exceeded
The trade association proposed that if a firm materially exceeds the 10 percent threshold it should report that fact to the SEC, and the Commission could consider imposing a limited clearing requirement after multiple exceedances, subject to a timeline for implementation.
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