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

Impact. This rule enables broker-dealers to offer customers cross-margining between Treasury securities and Treasury futures positions, requiring dual BD/FCM registration and joint clearing membership at both FICC and CME. Firms pursuing this capability must build new operational infrastructure to coordinate margin calculations across clearing organizations and implement customer-facing cross-margining services that weren't previously permissible.

Risk. The primary exposure sits in clearing operations, where firms must navigate coordination between two distinct clearing ecosystems with different margin methodologies, settlement cycles, and risk controls. Examination risk concentrates on whether risk management frameworks adequately capture cross-margined exposure dynamics and compliance with the exemptive order's conditions.

Recommended Action. Clearing Operations should immediately assess current Treasury clearing capabilities against the joint membership requirements and begin mapping system modifications needed for cross-margining calculations. Legal should review the exemptive order conditions alongside existing clearing agreements to identify gaps in current compliance frameworks.

Watch. Monitor for implementation guidance from FICC and CME regarding joint membership requirements and any updates to the Third Amended Cross-Margining Agreement as the April 2026 effective date approaches.