Clearinghouse Rules Simplified by SEC

The Securities Exchange Commission proposed rule changes on September 14, 2022 aimed at reducing risk in the U.S. Treasury market.

Gary Gensler, chair of the Securities and Exchange Commission, said in a news release that “the SEC plays an important role in ensuring that the Treasury market remains competitive, efficient, and resilient.”

In a fact sheet summarized on the SEC’s website, the proposed changes to Exchange Act Rule 17Ad-22 would:

  • Establish policies and procedures that require covered clearing agencies to submit certain eligible transactions for clearing to their direct participants.
  • Ensure that clearing agencies that clear U.S. Treasury securities have policies and procedures for calculating, collecting, and holding margin separately for direct participants’
    proprietary transactions and indirect participants’ transactions.
  • Ensure covered clearing agencies have policies and procedures in place to ensure that they have adequate means to facilitate access to clearing and settlement services for eligible
    secondary market transactions, including indirect transactions.

In the proposed changes to Exchange Act Rule 15c3-3a, broker-dealers would also be able to include margin required at covered clearing agencies in the U.S. Treasury market as a debit item. Under the SEC proposal the following secondary market transactions entered in by a member of the clearing agency would be subjected to clearing:

  • All repurchase agreements and reverse repurchase agreements secured by U.S. Treasury securities
  • All purchases and sales entered into by interdealer brokers,
  • All transactions executed between a clearing agency member and a registered broker-dealer, government securities broker, government securities dealer, hedge fund, or leveraged account.

“Central clearing doesn’t eliminate all risk, but it certainly does lower it. The amount of Treasury cash transactions that are centrally cleared needs to be increased, as only 13% of them were done in 2017. “I think these rules would help reduce risk across a vital part of our capital markets, whether we’re in normal times or stressful times.” Also stated by Gary Gensler.

You can read more about this article by Bryan Strickland at

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