The US Securities and Exchange Commission (SEC) is engaging in discussions with multiple firms interested in becoming central clearinghouses for US Treasuries and derivatives trading, following a new rule aimed at strengthening the world’s largest debt market.

“There’s some dialogue between potential applicants but there’s not a formal filing,” stated SEC Chair Gary Gensler at a Treasury market conference in New York on Wednesday, according to Bloomberg (paywalled). He emphasises that the discussions are ongoing and described the process as still being in its early stages.

This development comes in response to the SEC’s December rule mandating that a significant portion of Treasuries trading and nearly all repurchase agreements linked to US debt move to a central counterparty clearinghouse (CCP). CCPs serve as intermediaries between buyers and sellers, ensuring transaction completion and mitigating the risk of default spreading through the financial system.

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Gensler highlights the importance of competition, noting that at least one firm is considering making a formal filing, with others possibly following. “Generally we put these things out for public comment as well,” he adds.

Interested parties

CME Group CEO Terry Duffy mentioned in March that his derivatives exchange is contemplating seeking regulatory approval to clear US Treasuries. Similarly, Intercontinental Exchange indicated in April that it is exploring the possibility of offering a US Treasury clearing service. LCH, part of the London Stock Exchange Group, is also reportedly investigating this opportunity.

Currently, Depository Trust & Clearing Corp.’s subsidiary, the Fixed Income Clearing Corp., is the sole clearinghouse for US Treasuries. The firm forecasts that its daily clearing volume, currently about US$7 trillion, could increase by over US$4 trillion with the expanded clearing rules expected to be fully implemented by early 2026.