Executive Summary

Market Views on the SEC's U.S. Treasury Clearing Proposal

Several disruptions over the past years in both the U.S. Treasury and repo markets have inspired the U.S. Securities and Exchange Commission (SEC) to take a closer look at trading dynamics and the possibility of expanded clearing. According to a July 2021 Group of 30 (G30) report, 20% of U.S. Treasury commitments were cleared through DTCC’s Fixed Income Clearing Corporation (FICC). Meanwhile, repo and reverse repo cleared activity stood at 20% and 30%, respectively. Many transactions are settled bilaterally between clearing agent (Treasury CCP) direct participants and indirect participants, including principal trading firms (PTFs) which, as a group, transact in large volumes.

Methodology

From Q4 2022 through Q1 2023, Coalition Greenwich interviewed 40 buy-side and sell-side markets professionals to get their views on the SEC’s U.S. Treasury Clearing proposal. Respondents were based in the U.S., Europe and Asia.