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Strengthening the U.S. Treasuries Market

The SEC recently issued rule amendments around its 2022 expanded U.S. Treasury clearing proposal, bringing added regulatory clarity around the scope of the clearing requirements and implementation timelines. The final rules require a significantly larger portion of the U.S. Treasury cash and repo markets - specifically certain eligible secondary market transactions - to be centrally cleared by December 31, 2025 for cash transactions and June 30, 2026 for repo transactions. As a covered clearing agency, FICC will take the necessary steps as required under the amendments to prepare for this significant initiative.

DTCC remains committed to supporting the industry and providing solutions that enable compliance with the expanded treasury clearing rule. We are prepared for this significant undertaking and will continue to evolve our access models and enhance capital efficiency whenever possible to effectively support our clients. At the same time, we will continue to facilitate industry discussions and provide education and leadership around this important topic, as we work together towards a successful implementation.

The Federal Reserve and several large firms across the industry voiced strong concerns almost 40 years ago about the safety and soundness of the existing processes for clearing and settling U.S. government securities, including the risks associated with the failure of a few major firms, the inefficiencies of manual paper processing of trade confirmations, and bilateral trade-for-trade settlement.

In response, the Government Securities Clearing Corporation (GSCC) was established in 1986 by National Securities Clearing Corporation (NSCC) as an industry utility to provide for the clearing and settlement of U.S. government securities.

Like the role NSCC plays in the equities market, GSCC compared transactions and acted as the counterparty for settlement purposes for each net position. This served an important role to maintain the liquidity and integrity of the market for U.S. government securities.

FICC was created in 2003 to give DTCC clients a consolidated, common approach to fixed income transaction processing by integrating the GSCC and the Mortgage-Backed Securities Clearing Corporation (MBSCC). FICC would continue the same services that GSCC and MBSCC provided, but through separate divisions: GSD and Mortgage-Backed Securities Division.

After the 2008 financial crisis, FICC was designated as “systemically important,” pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). FICC is regulated by the U.S. Securities and Exchange Commission, and, under Dodd-Frank, is overseen by the Board of Governors of the Federal Reserve System.

FICC is a wholly owned subsidiary of DTCC. Created to protect market stability and maximize value for the industry, DTCC is a non-public, not-for-profit holding company that owns three registered clearing agencies. In addition to FICC, DTCC also owns DTC, the world’s largest central securities depository and a SEC-registered clearing agency for the settlement of securities transactions for eligible securities and other financial assets, and NSCC, a SEC-registered clearing agency and CCP that provides clearing, netting, settlement, risk management and CCP services for trades involving equities, corporate and municipal debt, exchange-traded funds, and unit investment trusts in the U.S.

Through its holding company structure and governance, FICC is user-owned and governed by the very market participants that it serves. Specifically, the common stock of DTCC is owned by the financial institutions that are participants of its three registered clearing agency subsidiaries, FICC, DTC and NSCC. DTCC’s and FICC’s boards of directors are primarily composed of representatives of the clearing agency participants, including buy- and sell-side market participants, as well as representatives from other self-regulatory organizations and independent directors. FICC is regulated by the U.S. Securities and Exchange Commission, and, under the Dodd-Frank Act, is overseen by the Board of Governors of the Federal Reserve System. Pursuant to applicable federal securities law regulations, FICC GSD’s rules and procedures are publicly available on its website at click here.

The statements and other information available on and through this page, including information in any links and documents available on this page, is for informational purposes only. Please refer to the GSD Rules for descriptions of the rules, procedures, and all rights, obligations, and other requirements of both FICC and its participants in connection with their use of GSD’s services. In the case of any discrepancy between the information available here and the GSD Rules, the GSD Rules govern.