Foreign banks beg SEC: Skip Treasury paperwork hassle?
Published Date: 8/13/2026
Notice
Summary
The SEC is reopening the comment period on a request to ease a rule that requires certain financial firms to clear all U.S. Treasury securities trades through special agencies. This mainly affects foreign banks dealing with non-U.S. clients and could change how they report these trades, possibly saving time and money. If you’re involved, now’s your chance to speak up before the deadline!
Analyzed Economic Effects
4 provisions identified: 1 benefits, 1 costs, 2 mixed.
Possible Exemption for Non‑U.S. Repo Trades
If your firm is a foreign financial institution that is a direct participant in a U.S. Treasury clearing agency, the SEC is considering exempting some repo trades with non‑U.S. clients from the rule that otherwise requires those trades to be cleared. The requests refer to transactions described as "Qualifying Non‑U.S. Transactions" (non‑U.S. client vs. non‑U.S. participant/affiliate/foreign branch) and ask the Commission to let some of those trades stay uncleared.
Firm‑Level Percentage Caps as Conditions
Commenters proposed letting a firm exempt some qualifying non‑U.S. repo trades only if those trades are below a firm‑specific Percentage Cap. Example caps discussed include 20%, 15%, or 10%, and one phased example would be 20% for two years, then 15% for two years, then 10%. One formula described compares a firm's qualifying non‑U.S. transactions to the firm's cleared repo activity (using a quotient) to decide if the firm stays under the cap.
Reporting and Consequences if Caps Are Exceeded
Commenters proposed that firms who materially exceed any Percentage Cap should be required to report exceedances, possibly to the Commission or to the U.S. Treasury securities CCAs, and that exceedances could trigger consequences such as cure periods or temporary loss of exemption. The notice specifically asks whether exceedances below an example threshold (e.g., 20%) or limited-duration breaches should be allowed and what cure period or prohibition should apply.
Market‑Wide Ratio Alternative Proposal
Some commenters suggested an industry‑level alternative called a "Market‑Wide Ratio" as a fixed threshold for the whole market that firms would compare to their firm‑specific calculation. One proposal would set the Market‑Wide Ratio using overall market repo activity divided by the number of direct‑participant firms, and commenters said the Commission should calibrate it periodically.
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