US Treasury market utilities set to expand cross-margining this year
Two U.S. Treasury market utilities are set to roll out new rules by the end of this year that will determine the amount of leverage hedge funds and other investors can deploy in trades, a step that could counterbalance rising transaction costs stemming from upcoming clearing requirements. The Depository Trust and Clearing Corporation (DTCC), a market infrastructure company, and futures exchange operator CME Group last year launched an enhanced cross-margining arrangement for clearing members that trade and clear both U.S. Treasury securities and CME Group interest rate futures. It would become available as Treasury market participants prepare for new rules introduced by the Securities and Exchange Commission in 2023 aimed at reducing systemic risk in the $28.5 trillion Treasuries market by forcing more trades through clearing houses.