US Treasury central clearing and settlement transformation

The SEC's Final Rule on enhancing risk management practices and facilitating centralized clearing of US Treasury security transactions is a major development that will have a significant impact on market participants.

Our analysis outlines the key considerations for market participants including:

• Considering the potential impact of increased operational costs due to required investments in technology infrastructure and increased costs from covered clearing agencies and/or sponsoring firms.
• Reviewing and updating downstream reporting obligations to account for potential changes to margin and reserve calculations.
• Conducting a comprehensive review and renegotiation of client contracts and documentation to ensure compliance with the new requirements.
• Updating policies, procedures, and systems to comply with increased regulatory reporting obligations.
• Reviewing the accounting literature, discussing the accounting requirements with advisors and independent auditors and reviewing the legal definitions of a principal versus an agent with legal counsel.
• Performing a thorough impact assessment and developing a robust implementation plan to ensure a smooth transition to the new requirements.

Learn more about the key details of the rule, the implications for market participants, and the potential benefits and challenges associated with its implementation by downloading our analysis.