The SEC Approves Mandatory Clearing of Transactions in US Treasury Securities: Issues for the Buy Side to Consider

January 29, 2024

On December 13, 2023, the Securities and Exchange Commission (the “SEC” or the “Commission”) voted 4-1 to approve Standards for Covered Clearing Agencies for U.S. Treasury Securities and Application of the Broker-Dealer Customer Protection Rule With Respect to U.S. Treasury Securities (the “Clearing Rule”)1 which requires the majority of transactions in U.S Treasury securities (“USTs”), including repurchase and reverse repurchase (or “repo”) transactions in USTs, to be cleared via a central clearing agency (“CCA”). The Clearing Rule has significant implications for buy side participants in the market for USTs, and has been the subject of much comment and robust discussion around its impact and implementation.2 Ultimately, the SEC made significant concessions from its original proposal based on market comments and concerns. Most notably, cash transactions in U.S. Treasury Securities involving buy side participants (e.g., hedge funds, mutual funds, money market funds, etc.) are excluded from mandatory clearing. Additionally, the SEC adopted a phased implementation approach, with compliance for the clearing of repo transactions slated to be effective June 30, 2026.

We had previously noted the Commission’s approval of the Clearing Rule for our clients.3 This memorandum provides an overview of the key provisions of the Clearing Rule, together with some pertinent background and a summary of the important issues buy side participants should consider as they prepare for implementation.

Please click the link below to view the full memorandum on this topic.


1 SEC Release No. 34-99149 (December 13, 2023), 89 Fed. Reg. 2714 (“Final Rule”). Commissioner Hester Peirce voted against adoption.

2 See, e.g., Letter dated January 3, 2023, from Ann Battle, Senior Counsel, Market Transactions, International Swaps and Derivatives Association, Inc. (“ISDA”) (“ISDA Letter”), available at:; Letter dated December 4, 2023, from Jennifer W. Han, Executive Vice President, Chief Counsel & Head of Global Regulatory Affairs, Managed Funds Association (“MFA”) (“MFA Letter”), available at also Letter dated December 23, 2022, from William C. Thum, Managing Director and Assistant General Counsel, the Asset Management Group of the Securities Industry and Financial Markets Association (“SIFMA AMG”) (“SIFMA AMG Letter”), available at There has also been much reporting in the market press regarding the Proposal. See, e.g., Securities Finance Times, Industry associations urge review of Commission treasury clearing proposals (January 10, 2023), available at:

3 See, SEC Approves Final Rule – Mandatory Clearing of Transactions in US Treasury Securities, Seward & Kissel Client Alert (December 18, 2023), available at: