The Securities and Exchange Commission today extended the compliance dates for Rule 17ad-22(e)(18)(iv)(A) and (B) under the Securities Exchange Act by one year to Dec. 31, 2026, for eligible cash market transactions, and June 30, 2027, for eligible repo market transactions. Under the rule, a covered clearing agency that provides central counterparty services for U.S. Treasury securities must establish, implement, maintain, and enforce written policies and procedures reasonably designed to require that every direct participant of the covered clearing agency submit for clearance and settlement all eligible secondary market transactions in U.S. Treasury securities to which it is a counterparty. The rule also requires a covered clearing agency to identify and monitor its direct participants’ submissions of transactions for clearing, including how the covered clearing agency would address a failure to submit transactions.

The Commission also issued a temporary exemption regarding Exchange Act Rule 17ad-22(e)(6)(i). This rule requires that covered clearing agencies have written policies and procedures reasonably designed to calculate, collect, and hold margin amounts from a direct participant for its proprietary positions in U.S. Treasury securities separately and independently from margin calculated and collected from that direct participant in connection with U.S. Treasury securities transactions by an indirect participant that relies on the services provided by the direct participant to access the U.S. Treasury securities covered clearing agency’s payment, clearing, or settlement facilities. Under this temporary exemption, a U.S. Treasury securities covered clearing agency is not required to enforce its written policies and procedures regarding Rule 17ad-22(e)(6)(i) until Sept. 30, 2025, instead of the original March 31, 2025, compliance date.

“The U.S. Treasury market is a critical piece of the global financial system. New rules must be implemented properly, and any operational issues must be addressed,” said SEC Acting Chairman Mark T. Uyeda. “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 U.S. Treasury covered clearing agency rules. The Commission stands ready to engage with market participants on issues associated with implementation.”

The extension will provide additional time for further engagement on compliance, operational, and interpretive questions, and facilitate an orderly implementation of the rules. The temporary exemption allows covered clearing agencies not to enforce policies and procedures established pursuant to Rule 17ad-22(e)(6)(i) against any market participants currently clearing indirect participant activity that are not ready to comply with such policies and procedures, but it does not affect the ability of a covered clearing agency to implement such policies and procedures for those that are prepared to comply. If a direct participant of a U.S. Treasury covered clearing agency determines to offer certain access models or segregated margin accounts, the covered clearing agency would be obligated to enforce those rules regarding such models or accounts against the relevant participant, and the direct participant must comply with those rules.

Source: SEC

SIFMA Statement On SEC Extension Of Compliance Dates For Treasury Clearing

SIFMA today issued the following statement from Kenneth E. Bentsen, Jr., president and CEO, on the Securities and Exchange Commission’s (SEC) extension of the compliance dates for Treasury clearing:

“SIFMA commends Acting Chairman Uyeda and the Commission for taking the step to extend the implementation date for mandated central clearing of Treasury securities and repurchase agreements. Given the importance of the Treasury market to the financial system and the economy, along with the expected significant issuance of Treasury securities in the coming years, it is essential that the implementation timeline for the clearing rules allows for a smooth transition so as not to disrupt this market.

For the past year, we have been working with our members, both buy side and sell side, and other market participants to develop standardized documentation, policies and procedures to facilitate the transition to mandated central clearing.

While we have seen continued uptick in cleared cash and repo Treasuries, market participants have become increasingly concerned that the original implementation dates were overly aggressive and would add unnecessary risk to the nation’s and world’s most important asset market.

Further, as we have documented over the past year, there remains the need for critical regulatory guidance to facilitate the transition in total. While the action by the Commission is the most prudent course, no one should interpret this as the industry and the market stepping back from central clearing. The industry will continue to plow forward with our work to accomplish the mandate set out in the rule.”

Source: SIFMA

A DTCC spokesperson said:

“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.

FICC remains committed to continually delivering our clients best-in-class central clearing solutions that enable greater efficiency and liquidity, promote transparency and competition, and improve the safety and soundness of the US Treasury market.”

Source: DTCC