The International Swaps and Derivatives Association (ISDA) published welcoming remarks by chief executive Scott O’Malia at its Frankfurt panel on US Treasury clearing, arguing that the Securities and Exchange Commission’s (SEC) clearing mandate has global reach and that implementation timelines should be revisited. He highlighted that mandatory clearing is due to apply to certain cash US Treasury securities at the end of 2025, with repo clearing scheduled to follow from June 30, 2026. ISDA framed the reforms as affecting non-US entities because SEC rules require clearing agencies to change policies so members clear in-scope products by the deadlines, including trades by those members or their branches with any counterparty. With the Fixed Income Clearing Corporation (FICC) having around 200 direct members including non-US banks, ISDA expects in-scope entities worldwide to run into the thousands. Preparatory work cited included proposed FICC rulebook changes, CME Group proposals for a new clearing service and ICE’s announced plan to launch a Treasury clearing service, alongside SIFMA-led work on documentation that still must accommodate evolving clearing models, rulebooks and client segregation solutions, and be executed with large numbers of counterparties supported by netting opinions. The remarks also pointed to unresolved capital and regulatory questions that could constrain client clearing, including limited recognition of cross-product netting in the US capital framework despite cross-margining offerings, the supplementary leverage ratio as a binding non-risk-sensitive constraint, and uncertainty over the final shape of US Basel III endgame rules and the global systemically important bank surcharge. ISDA and SIFMA analysis was cited as indicating the proposals could increase capital for client clearing businesses at US G-SIBs by 80%, and ISDA noted it has joined other trade associations in calling for at least a one-year delay to the implementation deadlines.
ISDA 2025-02-25
International Swaps and Derivatives Association calls for at least one-year delay to SEC US Treasury clearing deadlines
The International Swaps and Derivatives Association (ISDA) raised concerns about the global impact of the SEC's clearing mandate for US Treasury securities, urging a review of implementation timelines. ISDA noted unresolved capital and regulatory issues, including potential 80% capital increases for client clearing at US Global Systemically Important Banks (G-SIBs), and called for a one-year delay to the deadlines.