DTCC and CME Group Win Regulatory Approval to Extend US Treasury Cross-Margining | LeapRate | Online Trading Industry News, Broker Intelligence & Fintech Analysis
DTCC and CME Group have received regulatory approval from both the US Securities and Exchange Commission and the Commodity Futures Trading Commission to extend their cross-margining arrangement to end-user clients, with the expanded service set to launch on 30 April.
The arrangement will allow clients of dually registered broker-dealers and futures commission merchants that are common members of DTCC’s Fixed Income Clearing Corporation and CME to offset eligible positions across both clearinghouses.
Where clients hold transactions in US Treasury securities and interest rate futures with opposing risk exposures, the cross-margining arrangement will reduce margin requirements, free up capital, and improve liquidity.
A cross-margining arrangement between CME and FICC for proprietary house accounts has been in place since 2004.
“Our current cross-margining arrangement with CME Group has a proven track record of creating an average of $1 billion across both clearing houses in risk offsets every day, and we expect the end-user cross margin effort will lead to additional offsets for the industry,” said Frank La Salla, President and Chief Executive of DTCC.
Terry Duffy, Chairman and Chief Executive of CME Group, believes the expansion comes at a pivotal moment, with the SEC’s central clearing mandates now taking effect, making cross-margining essential both for operational efficiency and to help end users manage the costs of compliance.
