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The financial services industry is in a race to comply with the U.S. Treasury and Repo Markets central clearing mandate.
The Securities and Exchange Commission (SEC) decision to mandate central clearing for U.S. Treasury and Repo Markets will have a significant impact on the financial services industry. This sweeping change will impact a broad array of financial market participants, including banks, broker-dealers, insurance companies, corporate end users and institutional investors. Achieving full compliance with the clearing of cash secondary market transactions by December 31, 2025, and repo transactions by June 30, 2026, will present complex challenges to market participants.
The rule is aimed at creating greater transparency and mitigating risk through a more standardized and secure settlement process for U.S. Treasury securities and repos. For sell-side firms, important decisions regarding market access, capital allocation and client solutions will have to be made. For buy-side firms, the potential for increased clearing fees and margin requirements will have to be carefully analyzed. Across the industry, the scope of the central clearing mandate will be far-reaching, extending beyond the balance sheet to impact areas that include client service delivery, legal frameworks and financial resource allocation.
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Why EY?
Our multidisciplinary EY team is comprised of individuals with securities clearing, risk management, technology, data, margin modeling and central clearing infrastructure experience who help leading financial services firms navigate the intricacies of the U.S. Treasury central clearing mandate. The extensive required changes are reshaping market structure, and market participants must act quickly to assess business impacts and plan effectively for implementation. As further clarifications to the rule are made available, our dedicated EY team is monitoring regulatory developments and is equipped to provide you with a strategic, nimble approach to manage change.
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