There is broad industry consensus around the benefits of increased central clearing of U.S. Treasury transactions, however, the systemic risk mitigation objectives of a clearing mandate will not be achieved if market participants cannot effectively access clearing.
DTCC’s white paper, “Making the U.S. Treasury Market Safer for All Participants: How FICC’s Open Access Model Promotes Central Clearing,” explores how to advance central clearing around U.S. Treasury transactions.
There are significant differences between the cleared U.S Treasury market and the cleared swaps market, including differing histories, market participants, methods of execution and clearing arrangements. The paper suggests any clearing mandate, market regulation or associated requirements must take these differences into account.
Related: More Clearing, Less Risk: Increasing Centrally Cleared Activity in the U.S. Treasury Cash Market
DTCC’s subsidiary, Fixed Income Clearing Corporation (FICC), currently offers a variety of client clearing models for U.S. Treasury cash and repo transactions, including correspondent clearing, prime broker clearing and Sponsored clearing via FICC’s Sponsored Service, to allow market participants to select the model that best addresses their needs. This open and flexible approach has been developed over the course of four decades, providing the diverse array of U.S. Treasury market participants with access to central clearing on their preferred terms – and in a manner that meets their needs.
We invite you to download our white paper to learn more about our “open-access” approach to central clearing as well as recommendations and next steps.