With the deadline for mandatory central clearing of cash U.S. Treasury securities extended until year-end 2026, CME Group and Depository Trust & Clearing Corp. are pushing to implement an enhancement of their cross-margining arrangement by this December 31.
CME filed its proposal with the Commodity Futures Trading Commission in September, and DTCC’s Fixed Income Clearing Corp. (FICC) had to similarly seek Securities and Exchange Commission approval. The objective is to reduce the capital requirements of eligible end-user clients of CME clearing members who also hold positions at the FICC Government Securities Division (GSD) when trading CME interest rate futures and Treasury bonds.
“We are targeting a year-end 2025 go-live, subject to regulatory approval,” affirms Laura Klimpel, head of Fixed Income and Financing Solutions in DTCC’s Clearing & Securities Services businesses.
“FICC continues to focus on additional opportunities to further improve margin efficiency, including evaluating a broader expansion of cross-margining opportunities,” Klimpel said in written testimony for a House Financial Services Committee task force hearing on December 2.
“Cross margining between FICC-cleared cash and repo activity and CME-cleared futures has been available since 2004 for common members of both CCPs [central counterparties], as well as for pairs of affiliated members,” she added. The prospective extension to end-user customers “should encourage greater utilization of central clearing, thereby facilitating systemic risk reduction.”
DTCC Managing Director Laura Klimpel
Expansion of cross margining to covered clearing agency (CCA) members’ clients was included in the SEC’s December 2023 rule that called for clearing of most secondary trades in Treasury bonds, repurchase agreements (repos) and reverse repos. The compliance deadlines were extended in February 2025 by a year, to December 31, 2026, for cash Treasuries and June 30, 2027, for repos.
Availability of cross margining to the clearing clients of direct members is “something the industry had been talking about for a long time,” George Black, a principal in Deloitte’s capital markets practice, pointed out.
While preparations for clearing continue, CME and Intercontinental Exchange are gearing up to compete against FICC, the sole incumbent government-securities central counterparty. More clearers could lead to more cross margining.
Responses in August 2025 to a ValueExchange Clearing Pulse Survey (n=330) on level of confidence in being ready to support mandatory clearing ahead of the deadline.
CME Securities Clearing in December 2024 applied to the SEC to register as a clearing agency. A month later, the SEC published for comment the application and rulebook. Announcing approval of its registration on December 2, CME said it expected to launch in 2026’s second quarter.
CME said it was exploring opportunities to cross-margin Treasuries with its current products. That could include interest-rate futures, options and swaps, a service that would essentially compete against its cross-margining arrangement with the FICC.
“Both parties have publicly said that if CME enters as a CCA for Treasuries, they do not plan on disrupting their intentions to provide cross margining between the FICC and the CME,” Black noted.
Intercontinental Exchange announced in August that ICE Clear Credit’s clearing application and rulebook had been published by the SEC.
“We will look at cross-margining opportunities in the future if that demand is there from our customers,” said ICE Clear Credit chief commercial officer Paul Hamill. The first priority “is to launch a robust and operationally ready, scalable solution to clear U.S. Treasuries and to be the first competitor in this market for decades, providing customers a choice to clear through a different model and platform,”
ICE Clear Credit, which began operations in 2009, clears single-name credit default swaps regulated by the SEC and index-based swaps regulated by the CFTC. Like the CME, ICE has been testing operational, technological and risk-management readiness with market participants, and it intends to be ready on those fronts by this year-end.
Paul Hamill of ICE Clear Credit
“We think there’s a big opportunity for the market to transition to a seamless, immediate clearing model and eliminate residual bilateral counterparty risk,” Hamill said. “This will also reduce documentation requirements and simplify operational and risk management workflows.”
As for FICC, “We’ve had strong forward momentum in terms of the growth of our cleared volumes,” Klimpel commented, “and we are continuing to enhance our access models, to create more efficiency and opportunities for our clients who choose us for their central clearing solution in the Treasury space.”
“FICC has consistently demonstrated its ability to manage volatility within the U.S. Treasury market, reflecting robust and effective risk management and operational resiliency,” according to Klimpel’s December 2 testimony. She told House Financial Services Committee members that FICC cleared a daily volume record of over $11 trillion in April, a level that has since become routine, and that a new record, $13.2 trillion, was set on December 1. That topped $12.66 trillion on October 30.
September filings with the SEC pertained to a new cleared triparty offering, the Sponsored General Collateral “Collateral-in-Lieu” service; and a new triparty service within the existing Agent Clearing Service offering.
There are still some issues to resolve related to the SEC’s clearing rule. On September 30, SEC Commissioner Mark Uyeda listed seven, including “clarifying the [rule’s] extraterritorial scope”; “addressing ‘double margining’ issues for registered funds regarding cleared repos”; and “facilitating cross margining between securities and futures transactions at the customer level.”
At the Federal Reserve Bank of New York Treasury Market Conference on November 12, Uyeda referred again to such “outstanding issues” whose resolution “can have a significant impact on the costs associated with operating in this area and will affect how each firm is able to plan how it implements the rules.”
Noting the diverse range of holders of outstanding Treasury securities (percentages shown above), BNY said international market participants face “unique challenges” in adapting to the clearing rule due to time zone differences and compliance complexity across jurisdictions.
Audrey Costabile, a senior analyst in the market structure and technology team at Coalition Greenwich, said that clearing is a new requirement for many buy-side participants who currently lack clearing arrangements, and those organizations are likely to wait to prepare for the rules in terms of technology and counterparty agreements.
Treasury repos are a particular sticking point, for reasons that according to BNY include the rule’s potentially requiring clearing for inter-affiliate transactions used by multinational corporations to manage liquidity and risk; and general collateral (GC) repos in which funding is provided against a basket of securities that can include Treasuries.
“Requiring central clearing of agency GC repo transactions could raise the cost of funding these assets, which could in turn flow through to mortgage pricing,” BNY said.
Costabile sees year-end 2026 for cash Treasuries as “a reasonable goal,” while clearing repos by mid-year 2027 may be challenging. If the outstanding items aren’t dealt with by the end of first-quarter 2026, that timeline could change, Costabile said, adding, “A lot has to happen before the June 2027 repo deadline.”