Yahoo Finance Gensler Says SEC in Talks on Additional Treasury Clearinghouses
(Bloomberg) -- The US Securities and Exchange Commission is in talks with several firms seeking to become central clearinghouses for US Treasuries and derivatives trading under a new rule designed to fortify the world’s largest debt market.
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“There’s some dialogue between potential applicants but there’s not a formal filing,” SEC Chair Gary Gensler told reporters Wednesday on the sidelines of a Treasury market conference in New York. “It’s a process.”
The discussions are a response to the SEC’s move in December to finalize a rule requiring the migration of a large swath of Treasuries trading and almost all repurchase agreements linked to the debt to a central counter-party clearinghouse, or CCP.
Clearinghouses act as intermediaries between buyers and sellers in a trade, and assume ultimate responsibility for completion of the transaction. This reduces the chance of a default by one firm triggering wider losses in the financial system.
“I’m pro-competition,” Gensler said. “There’s at least one party that’s looking to potentially make filings with us and maybe others, and we’ll review those filings. Generally we put these things out for public comment as well.”
CME Group Inc. Chief Executive Officer Terry Duffy said at an industry conference in March that his derivatives exchange is considering seeking regulatory approval to clear US Treasuries. Additionally, the Intercontinental Exchange Inc. told Bloomberg in April that it was exploring whether there is an opportunity to offer a US Treasury clearing service. LCH, the clearinghouse owned by London Stock Exchange Group Plc, also was looking into the idea at the time, according to a person familiar with that matter.
Depository Trust & Clearing Corp., through its subsidiary the Fixed Income Clearing Corp., is currently the only central clearing house for US Treasuries. On Tuesday, the firm predicted its current daily clearing activity of about $7 trillion would increase by more than $4 trillion as a result of expanded clearing rules that fully take effect by early 2026.
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