FIA urges SEC to exempt FCMs from expanded US Treasuries clearing proposal

6 January 2023

FIA has submitted comments to the US Securities and Exchange Commission (SEC) in response to proposed rules establishing standards for covered clearing agencies for U.S. Treasury securities.

The SEC has proposed rules that would significantly expand the scope of Treasury transactions, including both those in secondary markets and repurchase agreements, that would have to be cleared at the Fixed Income Clearing Corporation.

In its comments, FIA noted that Futures Commission Merchants (FCMs) registered with the US Commodity Futures Trading Commission that are jointly registered with the SEC would be subject to the SEC's rules as well as existing CFTC rules governing FCMs. As proposed, the SEC rules do not align in all respects with CFTC rules. Accordingly, FIA asked the SEC, to the extent it approves the proposal, to exempt FCMs from the clearing requirement when acting in their capacity as FCMs.

"A clear exemption, tailored to enable FCMs to continue their activities in their capacity as such, would not adversely affect the purposes underlying the Proposed Rules and would relieve the SEC and FICC, as well as the CFTC, of having to consider what additional amendments to their respective rules and policies and procedures may be necessary to accommodate FCMs’ transactions in U.S. Treasury securities," FIA said.

Read the full comment letter to the SEC.

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