The Commodity Futures Trading Commission (CFTC) announced that it has approved a proposed order granting a limited exemption for the Chicago Mercantile Exchange Inc. (CME) and the Fixed Income Clearing Corporation (FICC). This exemption would allow their current cross-margining arrangement to be extended to certain customers, provided there are appropriate safeguards in place.
Acting Chairman Caroline D. Pham stated, “The CFTC is committed to working with the SEC to implement Treasury market reforms. Expanding cross-margining to customers will provide capital efficiencies that can increase liquidity and resiliency in U.S. Treasuries, the most important market in the world.”
The proposed order follows recommendations from the CFTC Global Markets Advisory Committee on Treasury market reform as well as the Securities and Exchange Commission’s mandate for clearing U.S. Treasuries [see CFTC press release No. 8860-24]. Currently, only clearing members can cross-margin futures positions in U.S. Treasury securities cleared at CME with cash market positions cleared at FICC.
Public comments on this proposal are being accepted for 30 days after its publication in the Federal Register. Comments can be submitted electronically through the CFTC’s online process, and all received feedback will be posted on CFTC.gov.
