Blog: Proposed SEC rule revisions address securities clearinghouses oversight – Financial Regulation News – Financial Regulation News

Securities and Exchange Commission (SEC) officials have outlined proposed rule changes focusing on Treasury securities clearinghouses oversight.

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“The Securities and Exchange Commission plays a critical role in how the Treasury market functions, including to help ensure that these markets stay efficient, competitive, and resilient,” SEC Chair Gary Gensler said. “One aspect of that role is our oversight of clearinghouses for Treasury securities. While central clearing does not eliminate all risk, it certainly does lower it. In 2017, however, only 13 percent of Treasury cash transactions were centrally cleared.”

Gensler indicated there is more work to be done with respect to the amount of Treasury activity centrally cleared.

“I think that these rules would reduce risk across a vital part of our capital markets in both normal and stress times,” he said. “This advances our three-part mission.”

The proposal would mandate U.S. Treasury market clearing agencies adopt policies and procedures designed to require members to submit for clearing certain specified secondary market transactions.

Per the SEC, the transactions would include all repurchase and reverse repurchase agreements collateralized by Treasury securities entered into by a member of the clearing agency; purchase and sale transactions entered into by a member of the clearing agency that is an interdealer broker; and purchase and sale transactions entered into between a clearing agency member and a registered broker-dealer, a government securities broker, a government securities dealer, a hedge fund, or a particular type of leveraged account.

The public comment period will remain open for 60 days following the publication of the proposing release in the Federal Register, and the proposing release will be published on SEC.gov.

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