New Clearing Rules To Grow Daily DTCC Treasury Volumes by $4B+

DTCC, a provider of post-trade market infrastructure for the global financial services industry, announced this week that, according to new industry feedback, daily Treasury volumes through its Fixed Income Clearing Corporation (FICC) are expected to rise by more than $4 trillion once the SEC’s expanded U.S. Treasury clearing rules take effect.

The new estimate, up from the original estimate of approximately US$1.63 Trillion in September 2023, was recently determined based upon a survey completed by 83 sell-side institutions following the final SEC’s U.S. Treasury clearing rule.

“Given the SEC’s rules around mandatory central clearing are now final and the industry’s understanding of their impact is becoming clearer, it is not surprising to us to see the incremental volume estimates hardening around US$4 Trillion daily,” stated Brian Steele, DTCC managing director and president of clearing and securities services. “While expanding Treasury clearing will be an important structural change for all Treasury market participants, we view it as a logical expansion of the services we provide and consistent with FICC’s mission. DTCC currently processes roughly US$7 Trillion in Treasury activity every day, and our buy-side volumes in the Sponsored Service are up over 70% year-over-year. We expect these growth trends to steadily continue as we move toward go-live for the expanded Treasury Clearing requirement.”

One area that continues to be discussed across the industry as a result of the new SEC rules is the treatment of “done-away” activity, which is a type of U.S. Treasury activity executed by a client with one counterparty but cleared by a firm different from the executing counterparty. DTCC said almost 30% of sell-side institutions responded in the survey that they plan to facilitate cleared U.S. Treasury activity out of either their Prime Brokerage, Agency Clearing or Futures Commission Merchant business lines, all of which traditionally offer “done-away” execution as part of their core client clearing services.

“There has been much discussion around done-away activity in connection with Treasury Clearing, with many buy-side firms concerned that client clearing services would only be offered by sell-side firms’ repo desk businesses, without done-away capabilities,” stated Laura Klimpel, managing director, head of DTCC’s fixed income and financing solutions. “What we are seeing now from the survey data is an emerging sell-side trend to address this challenge, with firms now looking to also leverage their Prime Brokerage, Agency Clearing and FCM businesses to clear clients’ Treasury transactions.”

In support of the expanded Treasury clearing rules, DTCC said it will continue to work closely with market participants across the industry, as well as organizations like SIFMA, to ensure appropriate access to central clearing for all market participant segments and facilitate a streamlined implementation.

“SIFMA continues to work with market participants—both buy and sell side—to identify and resolve issues and challenges in connection with ‘done away’ clearing,” said Rob Toomey, managing director, associate general counsel and head of SIFMA’s Capital Markets Group. “We expect these efforts to feed into our overall clearing documentation efforts and to allow market participants to choose the right approach for their business.”



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