SEC and CFTC Open Treasury Cross-Margining to More Customers

The SEC and CFTC approved coordinated relief on April 15 that lets the Chicago Mercantile Exchange and the Fixed Income Clearing Corporation extend their Treasury cross-margining arrangement to certain customers, not just clearing members. According to the CFTC, the order allows joint CME-FICC clearing members that are also registered as broker-dealers and futures commission merchants to hold futures customer funds in a commingled customer account at FICC, subject to safeguards.

In plain English, the change is meant to let firms offset risk more efficiently when they hold related U.S. Treasury cash positions and Treasury futures positions. Before this order, the cross-margining arrangement was more limited. Regulators framed the move as part of a broader effort to improve the resilience and liquidity of the U.S. Treasury market.

Why it matters

Cross-margining can lower the amount of collateral tied up in hedged Treasury positions and reduce friction between the cash and futures sides of the market. That is mainly an institutional market-structure change, but tighter funding efficiency in Treasuries can still matter to active traders because Treasury liquidity feeds directly into rates pricing, futures spreads, and broader risk sentiment.

What to watch next

Watch for the Federal Register publication and for details on how participating firms roll the model out in practice. The key question is whether broader customer access improves balance-sheet efficiency without creating new operational or segregation risks.