In a step toward assisting broker-dealers and market participants on the path to central clearing of U.S. Treasury securities, the Securities and Exchange Commission (SEC) has issued exemptive relief for inter-affiliate repo transactions and non-U.S. repo transactions.
Specifically, this exemptive relief excludes from the definition of eligible secondary market transactions:
- Certain repo transactions involving non-U.S. counterparties, subject to specified limits and conditions.
- Certain repo transactions between a direct participant of a U.S. Treasury securities clearing agency and any affiliated entity that is not an “investment company” as defined in Section 3 of the Investment Company Act of 1940, provided that affiliate otherwise meets the definition of an affiliated counterparty in Rule 17ad-22(a).
The relief follows public engagement regarding the scope of the Treasury clearing rules as they apply to these types of transactions, including requests for relief on behalf of market participants that the SEC published for comment.
“The Commission has listened carefully to market participants about the challenges of implementing our Treasury clearing rules,” said SEC Commissioner Mark Uyeda, who is leading the agency’s initiative to oversee the transition to central clearing of U.S. Treasury security transactions. “Successful implementation requires a thoughtful approach that must account for the realities of cross-border transactions. Today’s targeted relief addresses practical concerns while preserving the important benefits of central clearing.”
While preparing for compliance during the implementation period, market participants can contact SEC staff in the Division of Trading and Markets directly with questions by emailing tradingandmarkets@sec.gov or calling 202-551-5777.