CME - The SEC Call For Repo Clearinghouse

2024-03-18 12:56:30 ET

Summary

• The SEC will soon require Treasury and Treasury-based repo market participants to clear their trades through new SEC-approved clearinghouses.
• The proposal aims to stabilize the repo market, which has experienced frequent collapses for minor reasons.
• The SEC's initiative could be a non-event if there is no private sector interest in clearing, but there is potential for major investment or collateral management firms to provide clearing services.
• A major investment firm linked to an exchange would revolutionize the repo market.
• This article explains the repo market structure problem and its solution.

Introduction

The SEC will soon require Treasury and Treasury-based repo market participants to clear their trades through new SEC-approved clearinghouses. Some in the financial world overreacted to the SEC proposal, almost suggesting the sky was falling (r ead here ). This article considers the more likely ho hum outcome and the possibility of a genuine fix for our troubled debt markets.

The new rule was no great surprise, a predictable result of two regulatory developments. ...

For further details see: