Federal Register #Release No. 34-105248, File No. S7-2026-03

SEC Conditional Exemptive Relief for Cross-Margining U.S. Treasury Securities and Related Futures

This notice from the U.S. Securities and Exchange Commission (SEC) announces conditional exemptive relief for cross-margining of cleared U.S. Treasury securities and related futures contracts. - Government Buyer: - U.S. Securities and Exchange Commission (SEC) - OEMs and Vendors Mentioned: - Fixed Income Clearing Corporation (FICC) - Chicago Mercantile Exchange (CME) - Products/Services Requested: - No products or purchase quantities are requested; this is a regulatory action. - Service: Conditional exemptive relief for broker-dealers dually registered as futures commission merchants (Eligible BDFCMs) to cross-margin customer positions in U.S. Treasury securities and related futures contracts. - Involves margin offsets between U.S. Treasury securities and related futures for initial margin calculation. - Applies to positions cleared by registered clearing agencies (e.g., FICC) and derivatives clearing organizations (e.g., CME). - Unique or Notable Requirements: - Written customer agreements required - Disclosure of customer protections - Compliance with Commodity Futures Trading Commission (CFTC) rules - Relief is subject to specific conditions to maintain investor protections and enhance clearing efficiency - The relief is not limited to FICC and CME, but these are referenced as relevant clearing organizations - Purpose: - Facilitate efficient clearing and risk management - Reduce initial margin requirements for eligible firms and their customers - Maintain regulatory oversight and investor protections

Description

This notice from the Securities and Exchange Commission grants conditional exemptive relief to broker-dealers that are dually-registered as futures commission merchants, allowing them to cross-margin cleared U.S. Treasury securities and related futures contracts. The relief permits these entities to hold eligible customer positions and associated margin in a futures account from trade novation through settlement, facilitating risk offsets and potentially reducing margin requirements. The order aims to enhance clearing efficiencies and reduce costs for market participants while maintaining investor protections under the Exchange Act.

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