Derivatives marketplace CME Group and global financial services industry post-trade market infrastructure firm The Depository Trust & Clearing Corporation (DTCC) have collaborated to bolster treasury market cross-margining opportunities.
The firms noted they have identified enhancements to their existing cross-margining arrangement. The initiative will increase capital efficiencies for clearing members trading and clearing U.S. Treasury securities and CME Group Interest Rate futures.
“As evidenced in the G30 report, cross-margining has been identified as both a market benefit and a regulatory priority going forward,” CME Group Global Head of Clearing and Post-Trade Services Suzanne Sprague said. “CME Group is extremely pleased to expand on our collaboration with DTCC to deliver greater opportunities for capital efficiencies for participants who trade across cash and futures markets.”
Under the enhanced agreement, clearing members of CME and the Government Securities Division of DTCC’s Fixed Income Clearing Corporation (FICC) eligible to benefit from the program presently will be able to cross-margin an expanded suite of products.
Additionally, FICC-cleared U.S. Treasury notes and bonds and Repo transactions possessing time to maturity greater than one year will also be eligible, the firms noted.
“FICC recognizes the importance of this joint effort, and we are pleased to be working with CME Group to improve the efficiency and resiliency of the overall Treasury market,” DTCC Head of SIFMU (Systemically important financial market utilities) Business Development Laura Klimpel said.
The proposed changes are subject to regulatory approval and expected to launch in January 2024, authorities noted.