The U.S. Securities and Exchange Commission (SEC) has announced it is delaying implementation of the Treasury Clearing Rule, which requires Wall Street to move more US Treasury trading through clearinghouses.  

The industry has been pressing to delay the implementation of the new Rule, which amends SEC Rule 17ad-22.¹ The ramifications of the Rule are significant and wide-reaching. In its published preamble to the Rule, the SEC highlights “the critical and unique role in the US and global economy” played by the US Treasury market, adding that that U.S. Treasury securities serve as a “significant investment instrument and hedging vehicle,” as well as “a risk-free benchmark for other financial instruments, and an important mechanism for the Federal Reserve’s implementation of monetary policy”.

Given the complexity of the required changes, it is clearly critical that firms active in Treasury trading and/or financing get this right. The shift to mandatory central clearing presents a series of legal, operational, and risk management challenges. Being compliant with the rule goes beyond operations, technology and data changes, and specifically impacts client onboarding and repapering, collateral management and liquidity forecasting. 

 
Extended Timelines

The SEC has confirmed the following changes to existing compliance deadlines:

• Cash Market Transactions – extended by one year from December 31, 2025, to December 31, 2026
  
• Repo Market Transactions – extended by one year from June 30, 2026, to June 30, 2027
  
• Margin Separation Requirement – temporary exemption issued, extending the compliance date from March 31, 2025, to September 30, 2025.

The SEC has maintained the March 2025 deadline for clearing agencies to implement required access and risk management changes, but extended the deadline for clearing houses to enforce these requirements for clearing members to September 30, 2025.²


Strategic Planning Implications for Market Participants

While the extension provides a welcome relief, market participants should view this as an opportunity to truly reassess strategies and related processes, technologies and operating models and not pause their current transformation efforts. Given the deadline extensions, where should market participants focus their attention? Some of the very first considerations should include the following.

Process development and documentation

• Standardized Documentation – continue collaborating with industry bodies such as SIFMA to develop standardized documentation, policies, and procedures
  
• Access Models – evaluate and select appropriate clearing models, particularly as FICC, CME, and ICE develop their offerings.

Technology implementation

• Systems integration – double down on analysis and design of target operating models 
  
• Development and testing – allocate adequate time for development followed by comprehensive testing periods with the right counterparties.

Balance sheet and capital optimization

• Cross-Margining Opportunities – evaluate potential efficiencies from cross-margining across cash, repo, and futures transactions
  
• Capital Treatment – work with regulatory bodies to address capital constraints including supplementary leverage ratio (SLR) impacts and Basel III endgame implications.

Resource planning

• Procurement Process – begin mobilizing technical resources required for future state implementation
  
• Parallel Workstreams – develop strategies to simultaneously manage current state remediations and target state updates.

Overlapping transformation opportunities

• Automation – implement straight-through processing and algorithmic solutions to reduce manual touchpoints and accelerate settlements cycles
  
• Business Process Outsourcing – valuate non-core functions that could be outsourced to specialized providers, freeing internal resources for strategic initiatives
  
• Technology modernization – assess planning dependencies to replace legacy systems with cloud-based solutions offering greater scalability and reduced maintenance costs 
  
• Optimization of accelerated settlements – align UST clearing implementation with broader T+1 settlement initiatives to create cohesive, efficient post-trade processing.
  
  

Conclusion

The extended timeline offers breathing room, but the magnitude and complexity of required changes dictate continuous action. If you are interested in learning more about how your firm can navigate the complexity of the Treasury Clearing Rules, reach out to us using the form below.

References
¹ SEC.gov | SEC Extends Compliance Dates and Provides Temporary Exemption for Rule Related to Clearing of U.S. Treasury Securities
² SEC.gov | Rulemaking Activity