SEC Exempts Some Affiliate and Non-U.S. Repos From Treasury Clearing

The SEC on Friday exempted specified inter-affiliate and non-U.S. repurchase agreements, or repos, from its U.S. Treasury clearing requirements, granting relief ahead of the first extended compliance deadline.

The relief covers certain repos involving non-U.S. counterparties, subject to limits and conditions. It also covers some repos between a direct participant in a U.S. Treasury securities clearing agency and an affiliated entity. The affiliate cannot be an investment company under the Investment Company Act of 1940 and must meet the definition of an affiliated counterparty in SEC Rule 17ad-22(a).

The SEC adopted the rules in December 2023 and later extended the compliance dates to allow more time to address compliance, operational and interpretive questions. Eligible Treasury cash transactions are due to move to central clearing by Dec. 31, 2026, while eligible repos have a June 30, 2027, deadline. The requirements apply to specified transactions involving clearing members, not every Treasury trade. The original compliance dates were extended by one year; the Treasury clearing timeline gives the phase-in details.

SEC Commissioner Mark T. Uyeda, who leads the agency’s initiative overseeing the transition, said implementation must account for cross-border transactions. “Successful implementation requires a thoughtful approach that must account for the realities of cross-border transactions,” Uyeda said.