Careening Toward Clearing: Statement On Rules To Improve Risk Management In Clearance And Settlement And To Facilitate Additional Central Clearing For The U.S. Treasury Market, SEC Commissioner Hester M. Peirce Dec. 13, 2023
Date 13/12/2023
Thank you, Mr. Chair. A government that routinely runs substantial deficits needs to be cautious when structuring the rules for the markets in which it borrows. Additional central clearing in the U.S. Treasury market may be one way to strengthen the market to ensure that it can absorb the ever-increasing Treasury issuances, but how we get to increased central clearing matters. The recommendation that the Commission is considering today would commit the market to what may be a reckless ride down the path to mandatory clearing, with no brakes or off-ramps in the event the market takes a bad turn. Accordingly, I cannot support it.
We should take a more incremental approach—an approach that allows for course corrections or, if necessary, reversals if the effects of these recommended reforms differ from the Commission’s expectations. As many commenters pointed out, moving straight to a clearing mandate could disrupt the market. [1] Commenters have raised significant concerns about how the mandate will affect transaction costs and liquidity in these markets….
https://mondovisione.com/media-and-resources/news/careening-toward-clearing-statement-on-rules-to-improve-risk-management-in-clea/
Press Release
SEC Adopts Rules to Improve Risk Management in Clearance and Settlement and Facilitate Additional Central Clearing for the U.S. Treasury Market
FOR IMMEDIATE RELEASE
2023-247
Washington D.C., Dec. 13, 2023 —
The Securities and Exchange Commission today adopted rule changes to enhance risk management practices for central counterparties in the U.S. Treasury market and facilitate additional clearing of U.S. Treasury securities transactions. The rule changes update the membership standards required of covered clearing agencies for the U.S. Treasury market with respect to a member’s clearance and settlement of specified secondary market transactions. Additional rule changes are designed to reduce the risks faced by a clearing agency and incentivize and facilitate additional central clearing in the U.S. Treasury market.
“The $26 trillion Treasury market — the deepest, most liquid market in the world — is the base upon which so much of our capital markets are built,” said SEC Chair Gary Gensler. “Having such a significant portion of the Treasury markets uncleared — 70 to 80 percent of the Treasury funding market and at least 80 percent of the cash markets — increases system-wide risk. Today’s adopting release addresses clearing of Treasury securities in two important ways. First, the final rules make changes to enhance customer clearing. Second, the final rules broaden the scope of which transactions clearinghouse members must clear. I am pleased to support these rules because they will help to make the Treasury market more efficient, competitive, and resilient.”
https://www.sec.gov/news/press-release/2023-247