SEC Approves Exemptive Order and Proposed Rule Change to Permit Customer Cross-Margining in the U.S. Treasury Market

Impact. This rule creates a new cross-margining framework allowing dual-registered broker-dealers to offset customer Treasury cash and futures positions across FICC and CME clearing systems, reducing margin requirements and improving capital efficiency for Treasury market participants. Your institution must establish dual FCM registration, joint clearing memberships, and operational infrastructure to support customer cross-margining if you want to compete for institutional Treasury business.

Risk. Operational risk concentrates in clearing operations and technology systems that must now coordinate margin calculations across two separate clearing organizations with different settlement cycles and risk methodologies. The most vulnerable gap sits at the intersection of Treasury cash and derivatives processing, where manual workarounds or system failures could create regulatory violations or customer disputes.

Recommended Action. Trading leadership should immediately assess whether your Treasury market strategy justifies the operational investment required for dual registration and joint clearing membership. If proceeding, initiate the regulatory application process with FINRA and NFA while your operations team maps current Treasury clearing workflows to identify system integration points.

Watch. Monitor FICC Government Securities Division for implementing rule changes that will detail specific operational requirements and margin calculation methodologies, as these will determine your final system specifications and compliance procedures.