DTCC and CME Group have obtained regulatory approval to extend their US Treasury cross-margining arrangement to end-user clients, according to a joint statement. The approvals were granted by the US Securities and Exchange Commission and the Commodity Futures Trading Commission.
The expanded service will launch on 30 April and applies to clients of dually registered broker-dealers and futures commission merchants that are members of both DTCC’s Fixed Income Clearing Corporation (FICC) and CME.
Offsets across clearing houses
The arrangement allows eligible client positions in US Treasury securities cleared at FICC to be offset against interest rate futures cleared at CME, where risk exposures align. This enables margin offsets across the two clearing houses.
Cross-margining between CME and FICC has been in place for proprietary accounts since 2004. The latest expansion allows clearing members to extend the same treatment to client accounts.
Frank La Salla, DTCC CEO, said the existing model generates “an average of US$1 billion… in risk offsets every day”. CME Group CEO Terry Duffy said the extension comes as “SEC’s central clearing mandates now taking effect”.
Operational setup
Under the structure, FICC will designate cross-margin accounts for clients, while CME Clearing allows futures positions to be directed into those accounts during the day so they can be included in the offset process.
