SEC exempts some non-U.S. and affiliate repo trades from Treasury clearing rules

What the SEC granted

The SEC granted exemptive relief on October 30, 2026 from its Treasury clearing rules for certain repo transactions involving non-U.S. counterparties and for certain repo transactions between direct participants and a broader set of affiliated entities ^[1]. If your firm is a direct participant in a Treasury securities clearing agency, or trades repo with non-U.S. counterparties or affiliates, the order bears on which trades fall under the rules ^[1][2].

The order excludes the covered transactions from the definition of 'eligible secondary market transaction' in Rule 17ad-22(a) ^[1]. As a result, covered clearing agencies need not enforce the trade submission obligation against them ^[1].

The two categories of relief

The first category covers certain repo transactions involving non-U.S. counterparties, subject to specified limits and conditions ^[2]. Qualifying Non-U.S. Transactions are uncleared eligible secondary market repo transactions between a Non-U.S. Client and a Non-U.S. Participant, a qualifying non-U.S. affiliated counterparty of a direct participant, or a foreign branch of a direct participant that is a U.S. person ^[1].

The second category covers certain repo transactions between a direct participant of a U.S. Treasury securities clearing agency and any affiliated entity that is not an investment company ^[2]. The affiliate must otherwise meet the affiliated counterparty definition in Rule 17ad-22(a) ^[2].

How the conditions and thresholds work

Both thresholds are calculated using a rolling daily average of the immediately prior three quarters, with each quarter weighted equally ^[1]. Under the second condition, a direct participant must attest to each U.S. Treasury securities CCA of which it is a participant that it is monitoring and complying with the first condition ^[1].

The Commission revised the threshold denominator to include the firm's cleared repo transactions, including cleared transactions that are not eligible secondary market transactions because of the counterparty ^[1]. The denominator excludes inter-affiliate repo transactions because commenters said they are not market transactions ^[1].

The order also phases the cap down over three years ^[1]. It states that this gives participants time to onboard clients, obtain legal opinions, and update systems ^[1].

What commenters asked for

The Institute of International Bankers cited legal uncertainty in certain foreign jurisdictions over clearing requirements, potential registration requirements, and repos occurring when no U.S. Treasury securities CCA is operating ^[1].

SIFMA requested that the Inter-Affiliate Exclusion cover all counterparties meeting the ownership and consolidation prongs except investment companies ^[1]. It also requested removing repo transactions between non-U.S. affiliates and non-U.S. counterparties from the outward-facing condition, subject to an activity-level percentage threshold ^[1].

The SEC's explanation

Commissioner Mark T. Uyeda said the Commission has listened carefully to market participants about the challenges of implementing the Treasury clearing rules ^[2]. Chairman Paul S. Atkins has designated Uyeda to lead the agency's initiative to oversee the transition to central clearing of U.S. Treasury security transactions ^[2].

Uyeda said the targeted relief addresses practical concerns while preserving the important benefits of central clearing ^[2].

Background on the rules and deadlines

Eligible secondary market transactions include repo transactions collateralized by U.S. Treasury securities in which one counterparty is a direct participant of a covered clearing agency ^[1]. The SEC extended the original compliance dates for the Treasury clearing rules to allow more time for engagement and an orderly implementation ^[2].

In an extension on Feb. 25, 2025, the SEC moved the repo deadline to June 30, 2027 ^[3] and the cash-market compliance deadline to Dec. 31, 2026 ^[3]. On April 15, 2026, the SEC granted conditional relief for certain firms dually registered as broker-dealers and futures commission merchants to cross-margin customer Treasury securities and related futures ^[3].