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Treasury Clearing’s Operational and Cost Implications Come Into Focus

August 23, 2024 | 1 minutes reading time | By John Hintze

Amid a transition said to be bigger than T+1, new providers prepare to move in, and interrelationships begin to take shape.

Intercontinental Exchange – an operator of clearing platforms alongside a global array of equity, energy and commodity markets and data, fixed-income and mortgage technology businesses – is moving in on a new opportunity.

ICE’s June announcement of its intention to offer U.S. Treasury securities clearing was an early salvo toward a remaking of market structure and competitive alignments as Treasury trading adapts to a Securities and Exchange Commission clearing mandate over the next two years.

Depository Trust & Clearing Corp.’s Fixed Income Clearing Corp., the sole incumbent clearer serving the $27 trillion market, handling about 25% of the trades, has been ramping up its own preparations while ICE and others gather in the wings. CME Group and the London Stock Exchange Group’s LCH have publicly acknowledged interest.

Independent brokerages may explore ways to set up clearing operations to serve their customers. Futures commission merchant R.J. O’Brien & Associates is considering joining one or more clearinghouses for that purpose.

A DTCC-FICC “pulse check” in July indicated improved marketplace understanding of and preparedness...

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Topics: Treasury

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