Activity

It’s important to understand that the US clearing mandate for US Treasury and fixed-income bonds is in the implementation phase, and the compliance dates have been extended.
As of today, Monday, May 5, 2025, the mandatory clearing requirements for direct participants are not yet fully in effect. The current timeline is:
* September 30, 2025: Covered Clearing Agencies (CCAs) must implement required rulebook modifications.
* December 31, 2026: Direct participants of CCAs must begin clearing eligible cash market transactions (including US Treasury securities).
* June 30, 2027: Direct participants of CCAs must begin clearing eligible repo market transactions.
Currently, the primary clearinghouse for US Treasury securities is the Fixed Income Clearing Corporation (FICC), a subsidiary of the Depository Trust & Clearing Corporation (DTCC).
How many FCMs are currently clearing and settling these trades and purchases?
It’s difficult to provide a precise real-time number. Here’s why:
* Dynamic Participation: The number of Futures Commission Merchants (FCMs) and other direct participants actively clearing and settling US Treasury trades can fluctuate.
* Voluntary Clearing: Even before the mandate, some FCMs and other entities voluntarily cleared certain Treasury transactions for their own accounts and on behalf of clients. This number is likely to increase as the compliance dates approach.
* Indirect Clearing: Many market participants access clearing indirectly through sponsoring members (which often include FCMs and large banks). The number of FCMs offering these sponsored clearing services is a key factor, but the volume they handle for indirect clients varies.
What we do know:
* Direct Participants: The SEC mandate applies directly to “direct participants” of Covered Clearing Agencies (CCAs) like FICC. These direct participants include FCMs, broker-dealers, and other entities that meet the membership requirements of the CCP.
* FCM Role: FCMs are expected to play a significant role in clearing Treasury securities, both for their own trades and for providing access to clearing for their clients (indirect participants) through various clearing models (e.g., sponsored clearing, agency clearing).
* Capacity Concerns: Reports indicate that some FCMs have expressed concerns about the economics and the market’s capacity to absorb the increased demand for clearing as the mandate comes into full effect. They are evaluating their technology and infrastructure to handle the anticipated volumes.
* Increasing Participation: As the compliance deadlines draw nearer, more FCMs are likely to become active in offering clearing services for US Treasury securities to meet the needs of their clients who will be subject to the mandate.
To get a sense of the scale:
* FICC currently has a significant number of direct participants (over 200). A portion of these are FCMs.
* FICC also has a large number of sponsored members (over 2,600), indicating the extent of indirect participation facilitated by direct members, including FCMs.
In summary, while a precise real-time number of FCMs actively clearing and settling US Treasury trades under the upcoming mandate is not readily available, it’s expected to be a significant portion of the direct participants of FICC, and they will also play a crucial role in providing clearing access to indirect participants. This number is anticipated to grow as the mandatory clearing deadlines approach in late 2026 and mid-2027.

Video courtesy of ABN-AMRO

Video courtesy of ABN-AMRO