The U.S. Securities and Exchange Commission (SEC) has granted exemptions from mandatory Treasury clearing for qualifying non-U.S. repurchase and reverse repurchase agreements (repos) and transactions with a broader range of affiliates. The order resolves overlapping industry requests considered during implementation of the December 2023 clearing rules. It establishes a unified conditional exemption for qualifying overseas activity ahead of the previously established June 30, 2027, repo clearing deadline. The overseas exemption covers qualifying transactions with eligible non-U.S. clients by foreign direct clearing participants, non-U.S. affiliates and foreign branches of U.S. direct participants. Across a direct participant and its affiliates, qualifying uncleared activity must remain below USD 5 billion or below a specified percentage of the sum of that activity and cleared repos, excluding cleared transactions between a direct participant and an affiliated counterparty. The percentage cap is 25% from June 30, 2027, through June 30, 2028, then 20% through June 30, 2029, 15% through June 30, 2030, and 10% thereafter. Both tests use rolling daily averages over the preceding three equally weighted quarters, with values measured by the principal amount of the opening repo leg. Direct participants must attest to each relevant clearing agency that they monitor and comply with the limits. A breach requires immediate notification and either a plan to return to compliance or notice that the participant will stop relying on the exemption. Separate relief broadens affiliate eligibility beyond banks, brokers, dealers and futures commission merchants to entities meeting the rule's majority ownership and financial consolidation criteria. Affiliates that are investment companies under Section 3 of the Investment Company Act of 1940 remain ineligible for this relief, regardless of registration status. Earlier conditional relief for private funds using captive clearing subsidiaries remains unaffected.
SEC grants Treasury repo clearing relief for overseas transactions and a wider range of affiliates
The SEC has granted Treasury repo clearing exemptions for qualifying overseas activity and transactions with a wider range of affiliates. Overseas relief requires activity to remain below USD 5 billion or satisfy a percentage test phased from 25% to 10%, with compliance attestations to clearing agencies. Broader affiliate eligibility depends on majority ownership and financial consolidation criteria and excludes investment companies.