Treasury Market Clearing Gains Momentum Ahead of Schedule
The US Treasury market is undergoing a massive overhaul, with central clearing of Treasury securities and Treasury-collateralized repurchase agreements ahead of schedule. Federal Reserve Bank of New York President John Williams made this statement on September 22, citing data from the DTCC survey of FICC Government Securities Division members.
The industry's shift to central clearing is outpacing regulators' expectations, with over $1.2 trillion in daily Treasury cash activity already being centrally cleared. This leaves approximately $300-400 billion still needing to migrate before the December 31, 2026 compliance deadline for cash trades.
The SEC adopted its Treasury clearing rules in December 2023 in response to vulnerabilities exposed during periods of market stress. The March 2020 Treasury market seizure was a major catalyst for these changes.