SEC Approves Customer Cross-Margining in the U.S. Treasury Market

Concurrently, the SEC approved a rule change filed by the Fixed Income Clearing Corporation (FICC). This change incorporates a proposed Third Amended and Restated Cross-Margining Agreement between FICC and the Chicago Mercantile Exchange Inc. (CME) into the FICC Government Securities Division rules. This regulatory shift extends the availability of cross-margining directly to customer accounts. Prior to this order, only clearing members were permitted to cross-margin futures positions in U.S. Treasury securities cleared at CME with cash market positions in U.S. Treasury securities cleared at FICC. This structural change is designed to unlock additional liquidity within the financial system and reinforce the operational resilience of the U.S. Treasury securities market. The exemptive order applies strictly to broker-dealers that maintain dual registration as futures commission merchants with the CFTC and operate as joint clearing members of the clearing agency and derivatives clearing organization. Under the approved FICC rule change, the newly extended cross-margining capabilities are explicitly limited to positions cleared and carried for customers by entities that are common members of both FICC and CME. The exemption remains conditional, requiring strict compliance with the parameters outlined in the SEC's order.