State Street and Japan Securities Clearing Corporation (JSCC) have announced a collaboration to incorporate USD cash collateral into JSCC’s interest rate swap clearing service. The move aligns with the US Securities and Exchange Commission’s (SEC) upcoming US Treasury repo clearing requirements, set to take effect in June 2026.
State Street played a pivotal role in assisting JSCC in expanding the range of eligible collaterals for its clearing service, JSCC explains in a press release. The partnership enables clearing participants and their customers to post USD cash collateral, which will be managed daily through a jointly developed sponsored repo structure.
In a statement, State Street highlights the role of its Japan-based entity, State Street Trust and Banking, as the trustee for the US dollar collateral deposited by clearing participants. The collateral will be invested in sponsored repo transactions that comply with the forthcoming SEC regulations.
IRS Clearing Service
JSCC president and CEO Konuma Yasuyuki emphasises the significance of the development for global market participants: “The addition of USD cash to eligible collaterals in the IRS Clearing Service is a major milestone for JSCC. Amid rising calls for central counterparty clearinghouses (CCPs) to ensure the safe custody and efficient management of collateral, we are confident that State Street’s USD cash collateral management service will bring great value to our users in Japan and internationally.”
This initiative underscores growing efforts to enhance collateral management practices globally and ensure alignment with evolving regulatory frameworks. By introducing USD cash as eligible collateral, JSCC aims to better serve its clearing participants and strengthen its position in global financial markets.