The Commodity Futures Trading Commission (CFTC) recently approved a proposed order to grant a limited exemption necessary for the Chicago Mercantile Exchange Inc. (CME) and the Fixed Income Clearing Corporation (FICC) to make their existing cross-margining arrangement available to certain customers with appropriate safeguards.
Currently, only clearing members can cross-margin futures positions in U.S. Treasury securities cleared at CME with cash market positions in U.S. Treasury securities cleared at FICC.
“The CFTC is committed to working with the SEC (Securities and Exchange Commission) to implement treasury market reforms,” Acting Chairwoman Caroline Pham said. “Expanding cross-margining to customers will provide capital efficiencies that can increase liquidity and resiliency in U.S. Treasuries, the most important market in the world.”
Once the proposal is published in the Federal Register, comments will be accepted electronically for 30 days.
The proposal implements one of eight CFTC Global Markets Advisory Committee (GMAC) recommendations from February 2024 on treasury market reform and the SEC’s U.S. Treasury clearing mandate.
The GMAC advises the commission on issues that affect the integrity and competitiveness of U.S. markets and U.S. firms engaged in global business and makes recommendations regarding international standards for regulating futures, swaps, options, and derivatives markets, as well as intermediaries.