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SEC's New Rules Prompt ICE to Expand into Treasury Clearing Services

Quiver Editor

Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange, is positioning itself to become a central clearinghouse for US Treasuries and repurchase agreements (repos), services mandated by new regulations for the world's largest debt market. ICE is preparing its existing clearing house, ICE Clear Credit, to handle US Treasuries, according to Chris Edmonds, president of ICE’s fixed-income and data services. The company is seeking regulatory approval and is in discussions with the US Securities and Exchange Commission (SEC) as it readies its application for review.

Approval would significantly alter the $27 trillion Treasury market, which currently has only one registered central clearinghouse. Other entities have also shown interest in becoming central clearers for US government debt. "We believe we can provide a compelling alternative for those seeking to have more than one option in the market," Edmonds said. To lead this initiative, ICE has hired Paul Hamill, formerly global head of fixed-income distribution at Citadel Securities and plans to make additional hires to build out the service.

Market Overview:
  • ICE seeks SEC approval to clear US Treasuries and repos.
  • New SEC rules require some Treasury trades and all repo transactions to be centrally cleared.
  • Other firms, including CME Group (CME) and LCH, are also considering entering the market.
Key Points:
  • ICE Clear Credit will manage the new Treasury clearing service.
  • The new clearing service will have its own rulebook, membership, and risk-management framework.
  • ICE aims to provide a less disruptive, familiar entity with the necessary registrations and systemic importance.
Looking Ahead:
  • Market participants have until the end of 2025 to meet the new Treasury clearing rules.
  • Repo transactions must comply with the new rules by June 30, 2026.
  • Competition in the clearinghouse market is expected to benefit consumers.

Clearinghouses serve as intermediaries between buyers and sellers, ensuring the completion of transactions and reducing the risk of a default causing wider financial system losses. ICE Clear Credit, an SEC-registered clearing agency founded in 2009, handles credit derivatives and is designated a systemically important financial market utility by the Financial Stability Oversight Council. The new Treasury clearing offering will have its own rulebook, membership, risk-management framework, and risk committee, ensuring minimal disruption by using a familiar and well-registered entity.

The existing clearinghouse for US Treasuries is Fixed Income Clearing Corp., a subsidiary of Depository Trust & Clearing Corp., which predicts its current daily clearing activity of about $7 trillion will increase by more than $4 trillion due to the expanded clearing rules. SEC Chair Gary Gensler mentioned that the agency is in talks with other firms seeking to become central clearinghouses, including CME Group and LCH, owned by the London Stock Exchange Group (LSEG). "Competition is great for the market — consumers would end up benefiting from that," ICE's Edmonds said.

About the Author

David Love is an editor at Quiver Quantitative, with a focus on global markets and breaking news. Prior to joining Quiver, David was the CEO of Winter Haven Capital.

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