Buy-side firms “behind the curve” on prep for US Treasury clearing mandate

The Securities Industry and Financial Markets Association (SIFMA), BNY, Broadridge, and the Depository Trust and Clearing Corporation (DTCC), have collaborated with financial research consultancy The ValueExchange on a survey to determine industry readiness for the upcoming US Treasury clearing mandate. The results reveal limited preparedness outside of the US.

The US Treasury clearing mandate is a new regulation from the US Securities and Exchange Commission (SEC) that requires eligible US Treasury market transactions to be cleared through a SEC-approved covered clearing agency (CCA). The mandate will be implemented in two phases – 31 December 2026 for cash market transactions and 30 June 2027 for repo market transactions.

330 global market participants from buy-side and sell-side firms, custodians, and covered clearing agencies (CCAs) in the US, Europe, and Asia took part in the study.

Ready or not

Out of the US respondents, 71 per cent claimed to be “very familiar” with the upcoming changes while 25 per cent were “somewhat familiar”. Outside of the US, readiness levels drop significantly. Only 27 per cent of European respondents considered themselves to be “very familiar” while none from APAC did so – all Asian respondents rated themselves to be “somewhat familiar”.

Although the implementation deadline for cash transactions is only a little more than a year away, the study observes “limited active project work”. It describes buy-side firms as “behind the curve”, with 77 per cent of them still in the research stage and 29 per cent of them admitting that it is unlikely they would complete preparations before the end of 2027. 82 per cent of European respondents and 80 per cent of Asian respondents have not progressed beyond scoping.

Clock’s ticking

Perhaps due to limited active work, only 54 per cent of firms were “very confident” they will be ready by the deadline for cash transactions. 40 per cent were confident about the deadline for repo transactions.

The study stated that issues should be ironed out by 2026, or firms risk not being ready on time. Respondents identified regulatory direction as “the single most important dependency in project planning”. 45 per cent felt that to help them stay on track, clearer rules and more details on models by the end of 2025 are required.

Most firms revealed that operational and technology workloads will be the last to be completed. According to the study, this indicates that “a heavy lift is still ahead across systems and integration layers”.