Top 10 things you need to know about the US Treasury clearing mandate

1. What is the U.S. Treasury clearing mandate?

In December 2023, the U.S. Securities and Exchange Commission (SEC) adopted rules requiring that most secondary market transactions in U.S. Treasury securities, including both cash trades and repos, must be cleared through an SEC-approved covered clearing agency (CCA). These rules are a response to concerns about systemic risk and aim to increase transparency and resilience in this globally important securities market.

Initially, the Fixed Income Clearing Corporation (FICC) was the only CCA for repo transactions, but more recently CME has received SEC approval for CME Securities Clearing Inc. (CMESC), and ICE received approval for ICE Clear Credit LLC (ICE Clear Credit).

Implementation is phased and the compliance timelines have been pushed out, but the extended deadlines are now fast approaching – see Section 3 below.

The rules are enforced through amendments to Rule 17ad-22 under the Securities Exchange Act of 1934. CCAs that provide central counterparty (CCP) services for U.S. Treasuries are required to:

• establish, implement, maintain, and enforce written policies and procedures that require every direct participant (i.e. certain dealers) to submit all eligible secondary market transactions in U.S. Treasuries for clearance and settlement
• monitor direct participants’ submission of transactions for clearing, and take action where required submissions are not made
• ensure that margin for direct participants’ proprietary transactions is held separately from margin submitted on behalf of indirect participants (i.e., clients), in line with the margin segregation requirements.

The SEC requires CCAs to have appropriate means to facilitate access to clearing for all eligible secondary market transactions, including those of indirect participants (i.e., buy-side clients), and to review these policies annually. The rule also obliges CCAs to monitor compliance and report on direct participants’ adherence to the clearing mandate.

2. Which transactions are in scope?

The mandate applies to “eligible secondary market transactions”, which include:

• repurchase and reverse repurchase transactions in U.S. Treasuries by a direct participant (repos); and
• certain outright purchases and sales of U.S. Treasuries involving a direct participant (cash transactions),

in each case, unless an exclusion applies.

A number of buy-side entities will likely be out of scope of the cash transactions clearing requirement on the basis of an exclusion for “private fund (hedge funds)”. The remainder of this article therefore focuses on the clearing mandate for repos. If you would like any further information on the clearing mandate, including any relevant exclusions, for cash transactions, please do contact us.

3. Key deadlines

At the time of writing:

• cash transactions: mandatory clearing by 31 December 2026
• repo transactions: mandatory clearing by 30 June 2027

These timelines reflect exemptions granted to allow the industry more time to prepare for operational, legal, and documentation challenges.

4. Extraterritorial impact

The mandate will apply to repos where at least one counterparty is a direct participant of a CCA, unless an exclusion applies.

It is worth noting that not all direct participants of CCAs such as FICC are U.S. entities, so there is already some extraterritorial impact, with non-U.S. direct participants of CCAs having to comply with the relevant requirements.

As things currently stand, all direct participants (whether U.S. or non-U.S.) of a CCA will need to comply even when they are facing non-U.S. clients.

However, the SEC is considering exemptive relief for otherwise in-scope repo transactions between direct participants that are “Non-U.S. Participants” and their “Non-U.S. Clients” – see Section 5.

5. Potential exemptive relief for non-U.S. direct participants facing non-U.S. clients

Earlier this year, the SEC consulted on potential exemptive relief from the trade submission requirement for eligible secondary market transactions between “Non-U.S. Participants” and “Non-U.S. Clients” (Non-U.S. Transactions)₁ .

The exemption for Non-U.S. Transactions, if granted as set out in the consultation (and not taking into account any inter-affiliate exemption), would be as follows.

Direct Participant:

It is not possible to say with certainty whether the SEC will grant the relief, or the extent of the relief that will be granted.

We do, however, understand that these are areas of high focus for the SEC and we expect to hear more from them on this within the next few weeks.

6. Buy-side access to clearing

Buy-side firms and funds typically cannot be full direct members of CCAs. Instead, access to clearing will need to be obtained through a client access model.

FICC models

• Sponsoring/Sponsored Member Service. “Sponsoring Members” (direct participants) sponsor certain customers as “Sponsored Members” into a limited purpose membership, allowing those customers to clear through FICC but with the Sponsoring Member acting as processing agent. FICC has a Sponsored DVP Service, a Sponsored GC Service (Non-CIL), and a Sponsored GC Collateral in Lieu (CIL) Service. The Sponsoring Member acts as guarantor under the Sponsored DVP Service and Sponsored GC Service (Non-CIL) and, in more limited circumstances, under the Sponsored GC CIL Service. The Sponsored GC CIL Service is the newest of FICC’s offerings and launched in December 2025. It leverages BNY’s triparty infrastructure for collateral management and settlement.
• Agent Clearing Service. “Agent Clearing Members” (direct participants) act as agent for their customers (indirect participants, referred to as “Executing Firm Customers”) and are responsible for all obligations to FICC in relation to the relevant trades. In January 2026, DTCC announced that it had received approval from the SEC to offer a new ACS Triparty Service within its existing FICC Agent Clearing Service offering.

CMESC models

• Independent User. This model enables “Independent Users” of CMESC “Members” (direct participants) to submit trades to CMESC for clearing. Independent Users exchange margin with CMESC directly and settle directly with CMESC.
• Supported User. This model enables “Supported Users” of CMESC “Members” (direct participants) to submit trades to CMESC for clearing. Supported Users settle directly with CMESC but, unlike Independent Users, the Member is responsible for exchanging margin with CMESC.

ICE Clear Credit models

• Non-Participant Parties. Under this model, “Treasury Participants” (direct participants) clear for “Non-Participant Parties” (indirect participants). The Treasury Participants are fully liable as principal. Four margining account options are available: Client-Funded Gross IM, CP-Funded Gross IM, Hybrid Gross IM and Net Client IM. Settlement varies and depends on the margining account type.

Industry groups, including SIFMA, have been developing standard documentation to facilitate clearing access (see Section 7 below for more on this).

Client clearing arrangements will not necessarily be suitable for all buy-side customers, however. UCITS, AIFs and other non-US funds will need to consider their local asset protection and custody rules and other sectoral legislation, which can be particularly challenging where arrangements involve posting non-cash collateral to the counterparty on a security interest basis. The impact on associated regulatory obligations, such as the reporting obligation applicable to securities financing transactions such as repos under the Securities Financing Transactions Regulation (SFTR) in the EU and the UK should also be considered.

7. Legal documentation

The transition to mandatory central clearing for repos in U.S. Treasuries requires a comprehensive review and update of relevant legal documentation.

A key industry response has been the development of standardised template documentation by SIFMA, designed to promote consistency and efficiency as new participants enter the clearing ecosystem. SIFMA has convened cross-industry working groups to establish market standard documentation for key access models:

• “Done-With” Model: SIFMA has recently published its 2026 templates for this model (the first iterations were published in 2024). This model is relevant where the clearing broker is also the execution counterparty. The available templates comprise:

  (1) SIFMA 2026 SIFMA Master Treasury Securities Clearing Agreement Done-With, plus schedule and modules; and

  (2) SIFMA 2026 Treasury Clearing Annex (which is designed to form a part of an existing Master Repurchase Agreement (MRA) or Global Master Repurchase Agreement (GMRA)), plus schedule and modules.

• “Done-Away” Model: The “done-away” clearing model offers flexibility in execution and clearing relationships but introduces additional complexity in terms of documentation, margin flows, and operational coordination between the execution and clearing counterparties. We understand that SIFMA is actively developing template documentation for this model, which will address scenarios where the clearing broker is not the execution counterparty.

We are seeing increased adoption of the SIFMA templates, but note that it is also possible for existing documentation (such as sponsored repo agreements) to continue to be used, with suitable amendments.

The documentation is complex and, as always, there is the potential to negotiate and customise the details, so we suggest factoring in sufficient time for this exercise.

8. Operational readiness, cost and resource implications

For buy-side firms and funds new to central clearing, significant work will be required to ensure operational readiness, including in relation to margin calls and settlement flows.

Central clearing may also increase operating and treasury costs, with the potential for higher margin requirements.

9. Industry engagement and regulatory clarity

A number of key questions remain open, including the precise scope of any exemptive relief for non-U.S. participants, the suitability of different access models, and how cross-border legal and regulatory requirements will interact in practice. Buy-side firms should monitor developments closely (including any further guidance or no-action relief from the SEC) and engage with their counterparties, legal advisers, and relevant industry bodies to ensure they are well-positioned ahead of the applicable deadlines.

10. Implications for the buy-side

The U.S. Treasury clearing mandate for repos is expected to have a significant impact on the global buy-side as a whole.

Buy-side firms and funds with in-scope trades should consider planning ahead by mapping out their relationships (if any) with direct participants of CCAs, rather than waiting for direct outreach from them. However, given the current uncertainty over the scope of any exemptive relief for Non-U.S. Transactions (see Section 5), this exercise may need to be revisited once further clarity is available.

Outreach from direct participants of CCAs can be expected to continue. These may be requests to amend existing clearing documentation (where this is already in place), or to put in place new documentation. The latter will be a bigger lift, both for the negotiation of the legal documentation and the overall consideration of the arrangements, including compliance and operational implications of the clearing structure.

With the deadlines now fast approaching and the industry focusing on achieving compliance, this is a development that buy-side firms should be prioritising, where relevant, as we begin H2 2026.

If you would like to discuss this further, please do not hesitate to contact us.

_{1 The SEC has also granted “inter-affiliate” exemptive relief from the trade submission requirements for repo transactions in certain cases, most recently for repo transactions between a “Private Fund” and its “Captive Clearing Sub” that is a direct participant of the CCA provided certain conditions are met, including that they satisfy the other applicable conditions for the existing “Inter-Affiliate Exclusion”.}