SEC Initiates Cross-Margining to Boost Treasury Market Liquidity
The SEC has approved a new rule change allowing customer cross-margining in U.S. Treasury securities, enhancing liquidity and resilience. This regulatory update is expected to drive demand for technology solutions in financial market infrastructure, impacting procurement strategies in this sector.
Key Signals
- SEC permits cross-margining for Treasury securities
- CFTC aligns with SEC on Treasury market enhancements
- Increased demand for integrated margining solutions expected
"Today’s issuance of orders completes another step in the implementation of Treasury clearing. It advances the goal of both the SEC and the CFTC to unlock additional liquidity and helps ensure the market for U.S. Treasury securities remains resilient."
The Securities and Exchange Commission (SEC) has approved a conditional exemptive order that allows for customer cross-margining between cash and futures positions in U.S. Treasury securities. This change aims to bolster both liquidity and market resilience, expanding eligibility to certain customers served by dually-registered broker-dealers.
- The rule change aims to modernize Treasury clearing, aligning with efforts from the Commodity Futures Trading Commission (CFTC).
- Procurement professionals should note the increased demand for integrated solutions in margining across cash and futures.
- Vendors providing clearing and compliance systems are likely to find growth opportunities as a result of this regulatory shift.
- Federal agencies and financial institutions should reassess their contract requirements linked to Treasury market operations.
Quote: "Today’s issuance of orders completes another step in the implementation of Treasury clearing. It advances the goal of both the SEC and the CFTC to unlock additional liquidity and helps ensure the market for U.S. Treasury securities remains resilient." — Mark T. Uyeda, SEC Commissioner
Agencies
- Securities and Exchange Commission
- Commodity Futures Trading Commission
Vendors
- Fixed Income Clearing Corporation
- Chicago Mercantile Exchange Inc.