Banks, broker-dealers, asset managers and other participants in the US Treasury market are scrambling to comply with a regulatory mandate to step up their use of central clearing.
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Clearing will be mandatory for a broad swathe of market participants in both the cash and the repo markets, and the deadlines are approaching – December 2026 for trading in Treasury securities and June 2027 for repurchase transactions.
Today, roughly one fifth of the market’s trading volume is cleared through the Fixed Income Clearing Corporation, the only clearinghouse that currently offers clearing for the US Treasury market. The rest of the market relies on the bilateral model for trading, and many participants have little familiarity with the operational, financial and technological requirements of central clearing.
The adoption of central clearing, therefore, will require market participants to implement a host of changes to their processes, systems and counterparty relationships. Making matters more complicated, two other clearinghouses – CME Clearing and ICE Clear Credit – are preparing to offer clearing for the Treasury market, and each one of the three clearinghouses intends to offer several access models.
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