Wall Street Requests Extension of Treasury Clearing Rule Deadline
New York, USA - Financial institutions on Wall Street are urging regulators to extend the deadline for implementing a rule mandating centralized clearing for U.S. Treasury bonds. The current deadline stands at 2026.
The Securities and Exchange Commission (SEC) enacted new regulations in December 2023 to mitigate systemic risk in the $28 trillion Treasury market. The rules require more trades to be cleared through clearinghouses, enhancing the SEC's market oversight.
The Securities Industry and Financial Markets Association (SIFMA) and other industry associations have penned a letter to the SEC requesting a one-year extension for the cash and repo clearing deadlines.
"Final implementation of the Clearing Rule will enhance this market," stated SIFMA and the co-signatories. "However, given the Treasury market's systemic importance, combined with the anticipated substantial issuance in the coming years, a more extended implementation timeline is crucial to ensure a seamless transition without disrupting the market."
Other signatories include the Managed Funds Association, Alternative Investment Management Association, FIA Principal Traders Group, and the International Swaps and Derivatives Association.
"Our members fear that without an extension, the transition to central clearing may be jeopardized, potentially leading to disruptions in Treasury cash and repo markets and harming the financial system," the letter asserted.
Reuters reported in 2023 that an extension was under consideration due to outstanding details concerning the mandatory central clearing mechanism and industry concerns regarding the adequacy of the remaining implementation period.
The rule initially granted clearinghouses until March 2025 to comply with provisions on risk management, customer asset protection, and access to clearing and settlement services. Their members were to begin clearing Treasury cash market transactions by December 2025 and repo transactions by June 2026.