SIFMA and SIFMA’s Asset Management Group (SIFMA AMG) published the “2024 SIFMA Master Treasury Securities Clearing Agreement:  Done-With” and the Schedule to the Agreement to allow market participants, in connection with the expansion of clearing in the Treasury market, to meet their clearing documentation needs efficiently.  As a result of the SEC’s rule to require a significant portion of the Treasury cash and repo market to be cleared, many market participants will need to make appropriate arrangements to have their Treasury securities transactions cleared.  The SEC’s requirement is set to be fully implemented by June 2026.

“Firms are planning for the transition to Treasury clearing, and we are encouraging  industry participants to identify which transactions they conduct today that are in scope for the clearing mandate, how those transactions will get cleared, how to manage margin risk and payment arrangements for transactions, and above all, to have a transition plan in place, with people, processes, and legal staffing,” said Rob Toomey, managing director and head of capital markets at SIFMA.  “The documents published today are designed to help firms create significant efficiencies as we move toward the effective date of the new clearing rule.

”The agreement is the result of six months of work by a cross-section of the market involving broker-dealers and asset managers.  The terms represent a starting point for individual negotiations between clearing members and their customers to tailor the terms to their unique commercial, legal, and operational positions and needs.“The buy side has embraced the transition of various markets to central clearing, as it is both efficient and mitigates significant risk that was present in the market before the clearing mandate,” said Bill Thum, managing director and associate general counsel in SIFMA’s Asset Management Group.  “As we think about the transition of the Treasury market to clearing, we need to ensure that regulatory, accounting, and market structure challenges are successfully resolved and that liquidity is proven in the clearing space to demonstrate readiness for the mandate.”

Both SIFMA and SIFMA AMG have long supported efforts to increase the resiliency of the Treasury market and stressed the need to ensure the Treasury market remains resilient and deeply liquid.  SIFMA, SIFMA AMG and its members are pursuing a number of workstreams related to the Treasury clearing mandate to ensure a smooth transition while addressing issues involving regulatory, operations, and other market structure developments and enhancements.  The next step will be to develop terms for “done away” trading to allow for firms to execute transactions with a variety of dealers while clearing through a single entity, and to publish a playbook focused on operational issues that firms can use as they work through the transition.

SIFMA thanks its outside counsel Cleary Gottlieb for leveraging its expertise in U.S. Treasury clearing to support the joint working group in developing the Agreement.

The documents are available on SIFMA’s website at the following links:

• 2024 SIFMA Master Treasury Securities Clearing Agreement – Done-With
• Schedule to the 2024 SIFMA Master Treasury Securities Clearing Agreement – Done-With
• Modules to the 2024 SIFMA Master Treasury Securities Clearing Agreement – Done-With
• Market Practices & Model Documentation Library

Source: SIFMA