SEC proposes new rules for clearing agencies

The Securities and Exchange Commission today proposed a set of new rules for clearing agencies that provide central counterparty services for U.S. Treasury securities intended to improve risk management, among other things.

Clearing agencies covered by the rules would be required to have policies and procedures in place to require direct participants to submit for clearing all eligible U.S. Treasury secondary market transactions. Such transactions include repurchase and reverse repo agreements collateralized by Treasurys to which a direct participant is a counterparty, as well as all purchase and sale transactions of U.S. Treasury securities for direct participants who are acting as interdealer brokers. They also include all purchases and sales of Treasurys securities between a direct participant and a registered broker-dealer, government securities dealer or government securities broker; a hedge fund; and a levered account.

The proposal would also require covered clearing agencies to have policies and procedures to calculate, collect and hold margin for a direct participant’s proprietary positions in Treasurys separately from margin posted by that participant in connection with Treasury transactions by an indirect participant. It would further require a covered clearing agency to have policies and procedures to ensure that it has appropriate means to facilitate access to clearance and settlement services of all eligible secondary market transactions in Treasurys, including those of indirect participants. Comments on the proposal are due 60 days after publication in the Federal Register.