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CME Group plans 2027 launch for internal UST cross-margining

Created at 3 Sep · 3:41 AM1 source↑ Market-relevant
IN SHORT

CME Group has filed a proposal with the SEC to offer internal cross-margining for US Treasury trades, aiming to compete with the Fixed Income Clearing Corporation by providing margin offsets between futures, cash, and repo transactions.

Who's Involved

CME Group
clearing house planning internal US Treasury cross-margining
SEC
received initial proposal from CME Group
Fixed Income Clearing Corporation
competitor in US Treasury clearing

↳ Why This Matters

This move by CME Group signals increased competition in the critical US Treasury clearing market, potentially leading to more efficient margin management for financial institutions and impacting the operational landscape for fixed income trading.

Key facts

  • CME Group has submitted an initial proposal to the SEC for an internal cross-margining arrangement.
  • The proposed service will allow for margin offsets between futures, cash, and repo trades involving US Treasuries.
  • This initiative is intended to offer an alternative to the existing offset program with the Fixed Income Clearing Corporation (FICC).
  • CME Group aims to make this new cross-margining arrangement available to clients by 2027.

CME Group is advancing its strategy to directly challenge the Fixed Income Clearing Corporation (FICC) in the clearing of US Treasury securities. The exchange operator has submitted an initial proposal to the U.S. Securities and Exchange Commission (SEC) for an internal cross-margining arrangement. This new program is designed to offer clients margin offsets between futures, cash, and repo trades executed within CME's ecosystem. The initiative aims to provide an alternative to CME's existing offset program with FICC, potentially enhancing capital efficiency for market participants. CME Group intends to make this service available to clients by 2027.

Frequently asked questions

Cross-margining is a risk management technique that allows financial institutions to offset margin requirements across different types of trades or accounts, thereby reducing the total capital needed.

CME Group is a global leader in derivatives markets, providing a wide range of futures and options products and services.

FICC is a subsidiary of the Depository Trust & Clearing Corporation (DTCC) that provides clearing and settlement services for the US fixed income markets.

What Happens Next

01SEC review and approval of CME Group's proposal.
02Development and implementation of the internal cross-margining system.
03Client onboarding and launch of the service by 2027.
CME Headlines
  • 10-Year yield reaches new year-to-date high ahead of payrolls.
    2 Sep · 9:14 PM
  • 10-Year yield reaches new year-to-date high ahead of payrolls.
    2 Sep · 9:14 PM
  • Equities climb ahead of Fed Beige Book.
    2 Sep · 6:51 PM

How It Developed

CME Group filed an initial proposal with the SEC.
The proposal aims to offer internal cross-margining for US Treasury trades.
This initiative seeks to compete with the Fixed Income Clearing Corporation.
The new arrangement will provide margin offsets between futures, cash, and repo trades.
CME Group plans to launch this service internally in 2027.

Sources

T1
CME aims to offer client UST cross-margining internally in 2027Risk.net

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