Key facts
- A service allowing clients to cross-margin cleared US Treasuries cash and repo with futures trades was approved by US regulators in April.
- Only a handful of firms have successfully completed client transactions using the service.
- Implementation challenges include dual registration, regulation, and uncertainty over trade close-outs.
A program designed to allow clients to cross-margin cleared US Treasuries cash and repo with futures trades has encountered significant implementation difficulties since its approval by US regulators in April. Sources indicate that the process is complex, with only a limited number of firms managing to complete client transactions.
Stephen Hood, head of clearing Americas at Marex, described the process as "hard and it’s complicated." Marex was among the firms that cleared the initial cross-margin transactions. The obstacles are reportedly stemming from issues related to dual registration and regulation, as well as uncertainty surrounding trade close-out procedures.