MFA recommended that the Fixed Income Clearing Corporation (FICC) withdraw its proposed modifications to its Government Securities Division (GSD) rules pertaining to FICC membership and Treasury clearing in a comment letter.

The MFA letter explains how the FICC proposal will harm competition by requiring FICC netting members to exclusively clear all eligible secondary market transactions with FICC. This will impede the ability of new clearing agencies to register with the SEC to compete with FICC, creating an anti-competitive monopoly that will increase concentration risk in the Treasury markets.

The letter also highlights how the proposal’s new ongoing membership requirements are unnecessary, costly, and inappropriate barriers to FICC membership. The FICC proposal mandates that FICC members perform an independent review to confirm they are clearing all eligible trades with FICC. No other clearing agency has an analogous requirement.

“The ill-conceived FICC proposal jeopardizes the health of the Treasury markets—the foundation of the global financial system. The proposal should be withdrawn since it creates concentration risks, harms competition, and increases costs in Treasury markets,” said Bryan Corbett, MFA President and CEO.

Read the full comment letter here.

Source: MFA