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Market-Structure Changes Are Coming for U.S. Treasury Securities, and Competition Is Brewing

June 28, 2024 | 1 minutes reading time | By John Hintze

Clearinghouse operators look to challenge the current DTCC-owned utility provider; ICE enters the fray.

Adopted last December by the Securities and Exchange Commission, with phase-in milestones through June 2026, rules requiring central clearing for much of the U.S. Treasury securities market “will reduce risk across a vital part of our capital markets in normal times and stress times,” SEC Chair Gary Gensler declared. “That benefits investors, issuers and the markets connecting them.”

Among those supporting the structural reform in the world’s biggest and most important government securities market, and whose preparedness would be critical to pulling it off, was Fixed Income Clearing Corp. (FICC), the Depository Trust & Clearing Corp. subsidiary that is the sole central counterparty (CCP) servicing cash Treasury securities.

Citing industry feedback, DTCC said on June 4 that the clearing rules would increase FICC’s daily Treasury volumes by $4 trillion, up from a $1.63 trillion estimate last September. On June12, the industry-owned utility announced the launch of an interactive Capped Contingency Liquidity Facility (CCLF) Calculator, described as a critical tool for managing FICC’s liquidity risk arising from settlement activity.

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