The SEC has pushed back compulsory central clearing for US Treasuries by a year, stating the further attention to operational changes needed before the regulation can go live.
Rule 17ad-22(e)(18)(iv)(A) and (B) state that all US Treasury secondary market transactions must be cleared at central counterparty agencies. It was initially set to go live on 31 December 2025 for cash market transactions, and 30 June 2026 for repo market transactions.
Extending the deadlines will allow for operational, compliance and interpretation issues around the regulation to be resolved, the SEC said. It also highlighted the importance of a smooth transition that does not disrupt the US Treasuries market – which has outstanding issuance of almost US$30 trillion and underpins a number of global markets.
Industry groups have welcomed the announcement, but have cautioned that the year’s delay may not be sufficient.
ISDA CEO Scott O’Malia commented: “This is the absolute minimum extension that is necessary – several critical operational, regulatory and legal issues need to be resolved, and this will take time.”
A number of initiatives are ongoing to prepare for the regulatory change. Kenneth Bentsen, SIFMA president and CEO, explained: “For the past year, we have been working with our members, both buy side and sell side, and other market participants to develop standardised documentation, policies and procedures to facilitate the transition to mandated central clearing.”
“While we have seen continued uptick in cleared cash and repo Treasuries […] there remains the need for critical regulatory guidance to facilitate the transition in total.”
Particular areas of concern include the US supplementary leverage ratio, which could limit banks’ abilities to act as intermediaries and offer client clearing, and the lack of a framework for cross-product netting across derivatives and repo trades for clearing members.
There are also questions around how the regulation will interact with Basel III Endgame requirements and the potential of increased costs for global systemically important banks.
The Fixed Income Clearing Corporation (FICC) has already published proposed changes to its rulebook to align with the new regulation. On the extension, a DTCC spokesperson commented: “FICC appreciates the regulatory clarity around the US Treasury clearing mandate deadlines. Even with these changes to the various deadlines, we are ready to launch our enhanced access models and segregated customer margin capabilities in March, and will proceed with offering those services to our clients as and when they are ready to use them. We will also work closely with our clients to address any challenges that drove the request for an extension.”
SEC acting chairman Mark Uyeda commented: “The US Treasury market is a critical piece of the global financial system. New rules must be implemented properly, and any operational issues must be addressed.
“This one-year extension provides additional time to implement and validate operational changes. Direct participants will also have more time to implement important risk management changes to comply with US Treasury covered clearing agency rules. The Commission stands ready to engage with market participants on issues associated with implementation.”
The compliance deadline for Exchange Act Rule 17ad-22(e)(6)(i) has also been pushed back, weeks before its expected go-live of 30 March. It will now be operational from 30 September 2025.
This rule requires clearing agencies to separate the calculation, collecting and holding of direct participants’ margin amounts related to US Treasury securities from those of parties who rely on the direct participant for access to payment, clearing, or settlement facilities.
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