On February 25th, the SEC adopted rules under the Securities Exchange Act to extend by one year the compliance dates for Rule 17ad-22(e)(18)(iv)(A) and (B) (collectively known as the Trade Submission Requirement). The Trade Submission Requirement is designed both to mitigate the spread of risk to US Treasury securities covered clearing agencies (CCAs) and to bring the benefits of central clearing to more transactions involving US Treasury securities.
The one-year extension affords additional time for SEC staff to:
- facilitate an orderly implementation of the rules
- implement and validate operational changes
- provide more time for direct participants to apply important risk management changes in compliance with US Treasury CCA rules
- broaden engagement on compliance, operational, and interpretive questions
Compliance dates for eligible cash market transactions have been extended from December 31, 2025, to December 31, 2026, and compliance dates for eligible repo market transactions have been extended from June 30, 2026, to June 30, 2027.
The SEC also issued an order granting temporary exemptive relief for Exchange Act Rule 17ad-22(e)(6)(i) (known as the Margin Separation Requirement). This rule requires that CCAs have written policies and procedures reasonably designed to calculate, collect, and hold margin amounts from a direct participant for its proprietary positions in US Treasury securities separately and independently from margin calculated and collected from that direct participant in connection with US Treasury securities transactions by an indirect participant that relies on the services provided by the direct participant to access the US Treasury securities CCA’s payment, clearing, or settlement facilities. Under this temporary exemption, the compliance date for the requirements to enforce written policies and procedures related to the Margin Separation Requirement has been extended from September 30, 2025, to March 31, 2026.
The temporary exemption allows CCAs not to enforce policies and procedures established under the Margin Separation Requirement against any market participants currently clearing indirect participant activity that are not ready to comply with these policies and procedures. However, the temporary extension does not affect the ability of a CCA to implement these policies and procedures for those that are prepared to comply. If a direct participant of a US Treasury CCA offers certain access models or segregated margin accounts, the CCA must enforce rules regarding such models or accounts against the relevant participant, and the direct participant must comply with those rules.
Sources:
SEC Extends Compliance Dates and Provides Temporary Exemption for Rule Related to Clearing of U.S. Treasury Securities (sec.gov)
Final Rule (sec.gov)
Exemptive Order (sec.gov)
