NEW YORK (Reuters) – Recently adopted U.S. Treasuries clearing rules could increase clearing activity by the Fixed Income Clearing Corporation (FICC), a subsidiary of trade processor DTCC, by more than $4 trillion per day, DTCC said on Tuesday.
The rules, which will become effective in phases by June 2026, were adopted by the U.S. Securities and Exchange Commission in December and are aimed at reducing systemic risk in the $27 trillion U.S. Treasury market by forcing more trades through clearing houses.
Currently FICC is the country’s sole clearer of Treasuries, although competition is set to increase.
According to a survey completed by 83 sell-side institutions, the daily volume of Treasuries that will be cleared by FICC could rise by more than $4 trillion, up from a previous estimate of a $1.6 trillion increase, DTCC said in a statement.
It currently clears some $7 trillion worth of Treasuries per day.
“Given the SEC’s rules around mandatory central clearing are now final and the industry’s understanding of their impact is becoming clearer, it is not surprising to us to see the incremental volume estimates hardening around $4 trillion daily,” said Brian Steele, managing director and president for clearing and securities services at DTCC.
The Treasuries market is one of the most liquid in the world and the bedrock of the global financial system. But it has experienced liquidity issues, such as in March 2020, when pandemic fears caused market ruptures and liquidity rapidly deteriorated.
(Reporting by Davide Barbuscia; Editing by Will Dunham)
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