In December 2023, the Securities and Exchange Commission (SEC) introduced a new mandate requiring the majority of U.S. Treasury market transactions to be cleared through an SEC-approved Covered Clearing Agency (CCA). This initiative aims to enhance market transparency, reduce counterparty risk and increase the intermediation capacity of dealers. With CCA implementation beginning March 31, 2025 and transaction compliance to follow at the end of the year, find out what businesses need to know and how you can prepare.
On February 25, 2025, the SEC delayed the implementation of its Treasury clearing mandates. The compliance timelines, at time of writing in March 2025, are as follows:
- CCA implementation and enforcement of enhanced GSD practices (including segregation of house and customer margin): September 30, 2025
- Compliance date for eligible cash market transactions: December 31, 2026
- Compliance date for eligible repo market transactions: June 30, 2027
J.P. Morgan and the SEC U.S. Treasury clearing mandate
About the mandate
- Scope: The mandate applies to eligible repo and cash trades in the U.S. Treasury market.
- Clearing agency: Currently, the Fixed Income Clearing Corporation (FICC) is the sole clearing agency for U.S. Treasury securities.
- Compliance: Direct participants of CCAs, including J.P. Morgan Securities LLC, must clear all eligible secondary market transactions. Certain exemptions apply, such as trades involving central banks or sovereign entities.
J.P. Morgan's role and offerings
We are committed to supporting clients through this transition by offering a range of clearing services:
- Sponsored clearing: We currently provide a sponsored done-with model, bundling execution and clearing, and are reviewing the proposed sponsored done-away model.
- Agent clearing: We plan to offer agent clearing services to support done-away activity, allowing clients to trade with various repo providers while we handle clearing and settlement.
- Cross-margining: We aim to support cross-margining for clients, pending regulatory approvals.
Industry landscape and future developments
- Market changes: The mandate is expected to significantly increase the volume of centrally-cleared transactions.
- New entrants: Other clearinghouses, such as CME and ICE, are seeking regulatory approval to enter the U.S. Treasury clearing market.
- Global perspective: While the U.S. leads with this mandate, other regions are closely monitoring developments.
J.P. Morgan’s approach to the transition
J.P. Morgan actively participates in industry discussions and works with policymakers to address implementation challenges. We encourage clients to reach out to their J.P. Morgan representatives for more information and updates on our Treasury clearing offerings.
“At J.P. Morgan, we are committed to guiding our clients through the complexities of the SEC’s U.S. Treasury clearing mandate. Our team leverages deep market expertise and cutting-edge technology to ensure a seamless transition, helping clients navigate regulatory changes with confidence and maintain their competitive edge."
Kirsten Rastrick
Global Head of Fixed Income Financing Sales
What steps should your business take?
Given the scope of change, it is important to prepare by becoming familiar with key milestone dates and understanding the SEC clearing mandate. Learn all of this and more in our FAQs.
For further details, please contact your J.P. Morgan representative.
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