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The “done-away” US Treasury clearing model refers to a specific arrangement for clearing U.S. Treasury securities transactions where the execution of a trade is handled by one counterparty, but the clearing of that trade is handled by a different firm.
This contrasts with the traditional “done-with” model, where the same firm that executes the trade also handles its clearing.
Here’s a breakdown of key aspects of the “done-away” model:
* Separation of Execution and Clearing: The core characteristic is the unbundling of trading and clearing services. A client might execute a U.S. Treasury trade with Dealer A, but then choose to clear that trade through Clearing Firm B (which could be another dealer, a prime broker, or a Futures Commission Merchant – FCM).
* Increased Competition and Choice: The “done-away” model is expected to foster greater competition in the Treasury clearing space. It provides market participants with more options for where to clear their trades, potentially leading to better pricing and services for clearing.
* Risk Mitigation: By allowing different firms to handle execution and clearing, the “done-away” model can help mitigate risk. Clearing members typically perform credit checks, adding another layer of oversight to the process.
* Common in Other Markets: While relatively new to the U.S. Treasury market, the “done-away” model is standard practice in other centrally cleared markets, such as futures and over-the-counter (OTC) derivatives.
* Impact of SEC Mandate: The U.S. Securities and Exchange Commission (SEC) has issued a mandate requiring central clearing of a significant portion of U.S. Treasury securities transactions. This mandate has created a strong push towards the adoption of “done-away” clearing, as firms explore the various access models offered by clearinghouses like the Fixed Income Clearing Corporation (FICC), a subsidiary of DTCC.
* FICC’s Role: FICC is the primary clearinghouse for U.S. Treasury securities. They have been enhancing their services, including “done-away” capabilities (e.g., Agent Clearing Member Service), to accommodate the increased demand for central clearing under the SEC’s new rules.
* Industry Evolution: The shift to mandatory central clearing and the embrace of the “done-away” model represent a significant evolution in the U.S. Treasury market, aiming to enhance market stability, transparency, and risk management. This also presents opportunities for new entrants, such as futures brokers, to offer Treasury clearing services.
In essence, the “done-away” model introduces more flexibility and potentially more robust risk management to the U.S. Treasury clearing landscape by separating the roles of the executing broker and the clearing firm.

Video courtesy of ABN-AMRO

Video courtesy of ABN-AMRO