SEC Amended Final Rules: Clearing for US Treasury Securities

February 2025

The Securities and Exchange Commission (SEC) extends the compliance date and provides a temporary exemption for parts of its December 2023 final rule amending the standards applicable to covered clearing agencies (CCAs) for U.S. Treasury Securities (see KPMG Regulatory Alert here). The SEC states it is taking these actions to:

• Allow additional time to ensure proper implementation and validation of operational changes
• Facilitate a smooth transition and compliance with new risk management rules and to address any operational issues that may arise.

Compliance Extension

The SEC issues an updated final rule to extend the compliance dates set in its December 2023 final rule regarding the “Trade Submission Requirement” (together Rule 17ad-22(e)(18)(iv)(A) and (B)). The December 2023 rule requires CCAs for U.S Treasury Securities to have written policies and procedures reasonably designed to require that every direct participant of the CCA submit for clearance and settlement all eligible secondary market transactions in U.S. Treasury securities to which it is a counterparty and to identify and monitor its direct participants’ submission of transactions for clearing.

New compliance dates:

• Eligible Cash Market Transactions: Compliance date extended to December 31, 2026 (from December 31, 2025)
• Eligible Repo Market Transactions: Compliance date extended to June 30, 2027 (from June 30, 2026)

Temporary Exemption

The SEC also issues an exemptive order to temporarily exempt CCAs from enforcing their written policies and procedures regarding the “Margin Separation Requirement” (Rule 17ad-22(e)(6)(i) under the Securities Exchange Act of 1934) for a period of six months. The December 2023 rule requires CCAs to establish, implement, maintain, and enforce written policies and procedures reasonably designed to, as applicable, calculate, collect, and hold margin amounts from a direct participant for its proprietary U.S. Treasury securities positions separately and independently from margin posted by the direct participant in connection with U.S. Treasury Securities transactions by an indirect participant.

New enforcement date:

• Margin Separation Requirement: Enforcement date extended to September 30, 2025 (from March 31, 2025)

The SEC adds that it is not issuing a temporary exemption for provisions in the December 2023 final rule regarding certain access models or segregated margin accounts (Rule 17ad-22(e)(18)(iv)(C) and Rule 15c3-3, respectively).