Posted 12/13/2023, 4:33:00 PM
SECMandates Central Clearing of US Debt Trades to Bolster Market Stability
- SEC implementing new rules to increase central clearing of government debt trades to reduce risk and add stability
- Concerns over stability due to massive growth of $26 trillion US Treasury market and bank dealers' constrained ability to expand purchases
- Recent liquidity crunches highlight need for reform - flash rally, repo market stress, COVID crisis
- New rule will require clearinghouses to mandate members submit all eligible trades for central clearing
- Aims to increase share of centrally cleared trades from current 13% estimate to enhance liquidity and certainty