The U.S. Securities and Exchange Commission issued a conditional exemptive order allowing customer cross-margining between cleared cash market positions in U.S. Treasury securities and cleared U.S. Treasury futures, by granting limited relief from the broker-dealer customer protection rule for certain dually registered broker-dealer futures commission merchants. The SEC also approved a Fixed Income Clearing Corporation rule change to adopt a Third Amended and Restated Cross-Margining Agreement with Chicago Mercantile Exchange Inc. and embed it in FICC’s Government Securities Division rules, extending cross-margining beyond proprietary clearing members to eligible customer positions. The exemptive relief is available to any eligible dually registered broker-dealer and futures commission merchant that is a joint clearing member of a registered clearing agency clearing U.S. Treasury securities and a registered derivatives clearing organization clearing related futures, provided specified conditions are met. Key conditions include holding eligible U.S. Treasury securities positions and associated margin in a Commodity Futures Trading Commission-defined futures account from novation through settlement, written opt-in by both the firm and customer, and customer-facing documentation including a written non-conforming subordination agreement and pre-participation disclosures stating that Exchange Act segregation and Securities Investor Protection Act protections will not apply while assets are held in the futures account. The order also requires gross, customer-by-customer initial margin calculation using the same margin reduction methodology across the clearing agency and derivatives clearing organization, minimum customer margin collection at the aggregate required level, compliance with applicable risk management, capital, liquidity and segregation requirements, and implementation through amended clearinghouse rulebooks and any other needed SEC or CFTC approvals. Under the FICC-CME framework, margin offsets are applied on a customer-by-customer basis, with margin reductions capped at 80%. The SEC’s comment process on the exemptive application closed on March 5, 2026 with no comments received. The SEC orders will be posted on SEC.gov ahead of Federal Register publication, alongside a related CFTC exemptive order to be made available on CFTC.gov and in the Federal Register.
U.S. Securities & Exchange Commission 2026-04-15
U.S. Securities and Exchange Commission grants conditional relief and approves FICC-CME changes to enable customer cross-margining in cleared U.S. Treasury cash and futures
The U.S. Securities and Exchange Commission issued a conditional exemptive order permitting customer cross-margining between cleared cash market positions in U.S. Treasury securities and cleared U.S. Treasury futures by granting limited relief from the broker-dealer customer protection rule for certain dually registered broker-dealer futures commission merchants. The Commission also approved a Fixed Income Clearing Corporation rule change adopting a Third Amended and Restated Cross-Margining Agreement with Chicago Mercantile Exchange Inc., extending cross-margining from proprietary clearing members to eligible customer positions subject to specified margin, documentation, risk management and segregation conditions, including an 80% cap on margin reductions.