State Street on SEC Central Clearing
State Street published, "Answers to your FAQs on the SEC Central Clearing Mandate," which says, "We've provided a central repository of answers to your most frequently asked questions about the SEC Central Clearing Mandate for US Treasuries." The update tells us, "The SEC's central clearing mandate will require a significantly larger portion of US Treasury securities transactions to be cleared through a central counterparty (CCP), for which at this time Fixed Income Clearing Corporation (FICC) is the only qualifying servicer. This applies to both cash trades and repurchase agreements (repos)1 involving US Treasuries. Central clearing reduces counterparty risk by making the CCP the counterparty to all trades, ensuring that if one party to the initial trade defaults, the CCP mitigates the impact on the broader market." Compliance deadlines were recently shifted back to Dec. 31, 2026 from Dec. 31, 2025. State Street explains, "The mandate applies to direct participants of FICC, such as major banks and broker dealers, which generally have to shift their dealer-to-dealer cash activity and both dealer-to-dealer and dealer-to-client repo activity into clearing. The 'clients' here, (traditional buyside firms, including asset managers, hedge funds and pension funds), will also be impacted by this mandate. While buyside firms are not required to be direct participants of FICC and largely out of scope for cash trade activities, they will likely need to clear their repo trades through indirect access models." The piece adds, "The SEC rule became final in late 2023 and compliance dates were initially set in 2025 for cash transactions, and 2026 for repo transactions; however, these compliance dates have been delayed to 2026 and 2027, respectively."
