SEC Reopens Comment Period on Treasury Securities Clearing Exemption Structures

The SEC reopened the comment period on two pending requests for exemptive relief from its Treasury securities central clearing mandate, seeking public input on potential exemption structures for foreign financial institutions and affiliated counterparties.

In the reopening notice, the SEC said it is considering issuing a single exemption to address requests from the Institute of International Bankers ("IIB") and SIFMA. The requests concerned the Trade Submission Requirement under Exchange Act Rule 17ad-22 ("Standards for clearing agencies"), which requires a covered clearing agency for U.S. Treasury securities to maintain policies and procedures requiring its direct participants to submit eligible transactions for clearing. The IIB asked the SEC to exempt transactions between foreign financial institutions that are direct participants and their non-U.S. clients, while SIFMA asked the SEC to broaden the definition of an affiliated counterparty and exclude certain non-U.S. affiliate repo transactions.

The SEC sought comment on a firm-specific approach that would exempt a firm's qualifying non-U.S. transactions if they fall below a specified percentage cap, such as 10, 15, or 20 percent of a specified measure of the firm's repo activity. The agency asked whether the cap should decline over time and whether the calculation should use a weighted rolling daily average across three fiscal quarters.

The Commission also asked whether it should pair any firm-specific cap with a market-wide ratio. Under this approach, firms could use a fixed industry-wide threshold as an alternative if it produced a higher exemption amount than the firm-specific calculation.

Additionally, the SEC requested input on reporting and compliance mechanics for firms that exceed an exemption cap. The agency asked whether firms should be required to report exceedances to a U.S. Treasury securities covered clearing agency and whether a cure period or other consequences should apply.

Comments are due by August 31, 2026.