The U.S. Securities and Exchange Commission (SEC) has announced a delay in the implementation of mandatory clearing for U.S. Treasury securities. On February 25, 2025, the SEC extended the compliance dates for Rule 17ad-22(e)(18)(iv)(A) and (B) under the Securities Exchange Act.

This extension pushes the deadline for eligible cash market transactions to December 31, 2026, and for eligible repo market transactions to June 30, 2027.

Key Points of the Extension

The compliance date for eligible cash market transactions has been moved from December 31, 2025, to December 31, 2026.

For eligible repo market transactions, the deadline has been extended from June 30, 2026, to June 30, 2027.

The SEC also issued a temporary exemption regarding Exchange Act Rule 17ad-22(e)(6)(i), extending the enforcement date to September 30, 2025, from the original March 31, 2025 compliance date.

Implications for Market Participants

While this extension provides additional time for implementation, it is crucial that market participants, including Asian banks, do not delay their preparations to meet these new deadlines. There is still much work to be done, and the complexity of the changes required should not be underestimated.

Reasons to Act Now:

• Market Structure Changes: The transition to central clearing will involve fundamental market structure changes that require time to develop and implement.
• Documentation and Legal Work: Standard documentation and supporting legal opinions need to be developed to facilitate robust liquidity in cleared Treasury markets.
• Onboarding Processes: Dealers and clients face a significant onboarding process that cannot be rushed and requires careful planning.
• Operational Adjustments: Market participants need time to implement and validate operational changes to comply with the new rules.
• Risk Management Updates: Direct participants will need to implement important risk management changes to comply with U.S. Treasury covered clearing agency rules.

Call to Action

Despite the extension, Asian banks and other market participants should view this as an opportunity to get ahead of the curve, rather than a reason to delay preparations. The U.S. Treasury market is a critical piece of the global financial system, and proper implementation of these new rules is essential for maintaining market stability and efficiency.

By starting preparations now, market participants can:

• Ensure a smooth transition to the new clearing requirements
• Avoid potential disruptions in the cash and repo markets for U.S. Treasury securities
• Position themselves competitively in the evolving market landscape

In conclusion, while the SEC’s extension provides some breathing room, the complexity and scope of the changes required make it imperative that all market participants, including Asian banks, begin their preparations in earnest. The time to act is now to ensure readiness for these significant market changes.

Please get in touch for a Mandatory Clearing Health Check: [email protected].   secfinsolutions.com

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SecFin Solutions Can Help

In these uncertain times of increasing regulation, financial institutions face unprecedented challenges in navigating the evolving landscape.

To help you not just comply but thrive amidst these changes, I’m offering a special discount on my Coaching Services and Advanced Repo Course.

For a limited time, take advantage of a 10% discount on my Personalised Coaching, designed to guide you through the intricacies of the new clearing mandates.

Additionally, I’m offering a £400 discount on my comprehensive Advanced Repo Course, which will equip you with the knowledge and skills needed to excel in this new regulatory environment.

See Website for full details of these and also our Consulting Services.

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