The SEC’s Division of Trading and Markets has compiled a FAQs page to bring clarity to U.S. Treasury clearing practices.
Grygo is the chief content officer for FTF & FTF News.
For nearly everything that broker-dealers and other market participants want to know about the clearing of U.S. Treasury securities, officials at the Division of Trading and Markets of the Securities and Exchange Commission (SEC) have compiled a set of Frequently Asked Questions (FAQs).
The level of interest in the clearing of U.S. Treasuries is peaking as the SEC decided earlier this year to move key deadlines for its own rule requiring centralized clearing for U.S. Treasuries and Treasury-backed repurchase contracts. Firms are gearing up to comply with the new deadlines, which are “Dec. 31, 2026, for eligible cash market transactions, and June 30, 2027, for eligible repo market transactions,” according to the SEC’s Feb. 25, 2025 announcement.
The FAQs are a compilation of questions and concerns that SEC staff have had to answer regarding rule amendments to the onset of the new clearing requirement.
“The staff is committed to assisting broker-dealers and other market participants on the path to central clearing in the U.S. Treasury market,” says Jamie Selway, director of the Division of Trading and Markets, in a prepared statement. “FAQs are one of the numerous ways in which Commission staff is continuing to engage to provide clarity to market participants as the compliance dates of Dec. 31, 2026, and June 30, 2027, approach, for cash and repo, respectively.”
The set of FAQs dives deep into key subjects such as:
- Application of the Reserve Formulas with Respect to Cleared U.S. Treasury Securities;
- Prefunding Customer Margin Requirements with Cash or U.S. Treasury Securities Owned by the Broker-Dealer;
- Excess Margin Collateral; and
- Mark-to-Market or Variation Margin Payments
At the same time that the FAQs were released, SEC Chairman Paul S. Atkins announced that SEC Commissioner Mark T. Uyeda will oversee the regulator’s ongoing efforts to facilitate the central clearing of U.S. Treasuries.
“It is critical that the transition to clearing U.S. Treasury securities goes smoothly,” Atkins says in a statement. “To that end, I am pleased Commissioner Uyeda has agreed to coordinate the ongoing work being done across the SEC to prepare. … There’s work still to be done, both at the agency and within industry, and Commissioner Uyeda and I look forward to engaging with stakeholders to make sure we get this right.”
Mark T. Uyeda
SEC staff members have included a caveat for the FAQs, underscoring that these responses “represent the views of the staff of the Division,” according to officials. “They are not a rule, regulation, or statement of the Commission. The Commission has neither approved nor disapproved this content. These responses, like all staff statements, have no legal force or effect: they do not alter or amend applicable law, and they create no new or additional obligations for any person.”
The FAQs page can be found here: https://shorturl.at/tP42f
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