New Services Will Offer Increased Margin Efficiencies for Offsetting Transactions Beginning April 30

The Depository Trust & Clearing Corporation (DTCC), the premier post-trade market infrastructure for the global financial services industry, and CME Group, the world’s leading derivatives marketplace, announced that their expanded cross-margining arrangement, designed to create additional capital efficiencies for market participants, has received regulatory approvals from the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

Beginning April 30, DTCC and CME Group will extend the benefits of cross-margining to end-user clients of dually registered broker/dealers and futures commission merchants (FCMs) that are common members of both the DTCC’s Fixed Income Clearing Corporation (FICC) and CME. Clients can benefit from increased capital and margin efficiencies when clearing transactions in U.S. Treasury securities through FICC and interest rate futures through CME when those transactions have offsetting risk exposures. Clients active in trading U.S. Treasury and interest rate derivatives will be able to offset eligible positions across both clearinghouses, reducing margin requirements, freeing up capital and improving liquidity.

“The importance of efficient cross-margining opportunities across U.S. Treasury securities and futures activity is critical as centrally cleared U.S. Treasury activity continues to grow. Our current cross-margining arrangement with CME Group has a proven track record of creating an average of $1 billion across both clearing houses in risk offsets every day, and we expect the end-user cross margin effort will lead to additional offsets for the industry,” said Frank La Salla, President & CEO at DTCC. “We are delivering meaningful margin and capital efficiency benefits for end-user clients, while helping our members support more effective risk management across cash U.S. Treasuries and interest rate futures. We look forward to continuing to advance our offerings to deliver optimal efficiency and capital benefits to our clients.”

“The extension of our cross-margining partnership to client accounts comes at a pivotal moment for U.S. Treasury market participants,” said Terry Duffy, CME Group Chairman and Chief Executive Officer. “With the SEC’s central clearing mandates now taking effect, cross-margining is essential — not only for operational efficiency, but to help end users manage the real costs of compliance. Decades of collaboration between our two organizations and regulators have laid the groundwork, and now our partnership will deliver additional margin and capital efficiencies across the marketplace.”

CME-FICC cross-margining arrangements have been available to common clearing members with respect to their proprietary (“house”) accounts since 2004, with significant enhancements to the arrangement announced in 2024. This latest expansion will now enable clearing members to extend equivalent margining benefits to their clients.

Under the arrangement, FICC will designate cross-margin accounts, allowing all eligible positions in the account to offset with eligible CME Group interest rate futures. CME Clearing allows participants to direct futures to end-user cross-margin accounts throughout the day, thereby making them available for offset in the cross-margin arrangement.

Source: DTCC

SEC Approves Exemptive Order and Proposed Rule Change to Permit Customer Cross-Margining in the U.S. Treasury Market

The Commodity Futures Trading Commission approved an order to grant a limited exemption necessary for the Chicago Mercantile Exchange Inc. and the Fixed Income Clearing Corporation to make their existing cross-margining arrangement available to certain customers with appropriate safeguards.

The order permits joint clearing members of CME and FICC that are dually registered as broker-dealers with the Securities and Exchange Commission and futures commission merchants with the Commission to hold futures customer funds in a commingled customer account at FICC. Prior to th exemptive order, only clearing members could cross-margin futures positions in U.S. Treasury securities cleared at CME with cash market positions in U.S. Treasury securities cleared at FICC.

“The joint action supports both the CFTC’s and SEC’s broader effort to strengthen the resilience and liquidity of the U.S. Treasury market,” said Chairman Michael S. Selig. “By enabling more efficient risk management across related products, this proposal moves us closer toward a more modern, robust market structure.”

The exemptive order will be available on CFTC.gov and published in the Federal Register. A related SEC exemptive order will be available on SEC.gov and published in the Federal Register.

Source: CFTC

SEC Approves Exemptive Order And Proposed Rule Change To Permit Customer Cross-Margining In The U.S. Treasury Market

The Securities and Exchange Commission issued a conditional exemptive order that permits customer cross-margining of cash market positions in U.S. Treasury securities cleared by a registered clearing agency and futures positions in U.S. Treasury securities cleared by a registered derivatives clearing organization. The order provides for an exemption from the broker-dealer customer protection rule for a broker-dealer that is dually-registered as a futures commission merchant with the Commodity Futures Trading Commission (CFTC), and is a joint clearing member of the clearing agency and derivatives clearing organization, to permit the broker-dealer to make cross-margining available to certain customers in a futures account provided the conditions of the order are met.

In addition, the Securities and Exchange Commission approved a proposed rule change filed by the Fixed Income Clearing Corporation (FICC) pursuant to which it would enter into a proposed Third Amended and Restated Cross-Margining Agreement with the Chicago Mercantile Exchange Inc. (CME) and incorporate that agreement into the FICC Government Securities Division rules, along with related rule changes. The agreement would extend the availability of cross-margining to positions cleared and carried for customers by a dually registered broker-dealer and futures commission merchant that is a common member of FICC and CME. The agreement and related rules are consistent with the exemptive order. Prior to today only clearing members could cross-margin futures positions in U.S. Treasury securities cleared at CME with cash market positions in U.S. Treasury securities cleared at FICC.

“The issuance of orders completes another step in the implementation of Treasury clearing,” said SEC Commissioner Mark T. Uyeda, who has been leading the SEC’s efforts in this area. “It advances the goal of both the SEC and the CFTC to unlock additional liquidity and helps ensure the market for U.S. Treasury securities remains resilient.”

The exemptive order and order approving the proposed rule change will be available on SEC.gov before publication in the Federal Register, and a related CFTC exemptive order will be available on CFTC.gov and also in the Federal Register.

• Order
• FICC Rule

Source: SEC