On 25 February 2025, the United States Securities and Exchange Commission (US SEC) announced the extension of compliance dates and issued a temporary exemption through two documents: “SEC Extends Compliance Dates and Provides Temporary Exemption for Rule Related to Clearing of U.S. Treasury Securities” and “Temporary Exemption Regarding Exchange Act Rule 17ad-22(e)(6)(i).” The compliance deadlines for Rule 17ad-22(e)(18)(iv)(A) and (B) under the United States Securities Exchange Act have been extended to 31 December 2026 for eligible cash market transactions and 30 June 2027 for eligible repo market transactions. US SEC granted temporary exemption for Rule 17ad-22(e)(6)(i), postponing its enforcement until 30 September 2025 instead of the original deadline of 31 March 2025. Relevant Entities which need to consider this compliance requirement is listed below:
- Covered Clearing Agencies (CCAs): US SEC-registered clearing agencies that provide central counterparty services for U.S. Treasury securities.
- Direct Participants: Entities that are members of a CCA and directly clear and settle transactions (e.g., banks, broker-dealers).
- Indirect Participants: Financial entities that rely on a direct participant to access the CCA’s clearing and settlement services.
- Broker-Dealers (subject to Rule 15c3-3): Brokers or dealers in securities that must comply with the US SEC’s customer protection rule (as amended for U.S. Treasury securities).
The amendments to Rule 17ad-22(e)(18)(iv)(A) and (B) mandate that covered clearing agencies ensure their direct participants clear all eligible secondary market transactions. These agencies must also monitor compliance and establish procedures to address failures in submission. The temporary exemption under Rule 17ad-22(e)(6)(i) pertains to the separation of margin between proprietary positions and indirect participant transactions. While covered clearing agencies are not required to enforce margin segregation rules until the new deadline, those offering segregated margin accounts must comply as soon as they implement such models.
To comply with the extended deadlines, market participants, including broker-dealers, investment funds, and clearing firms, must align their processes with the trade submission requirements of Rule 17ad-22(e)(18)(iv) by ensuring the proper monitoring and enforcement of clearing obligations, updating operational procedures, refining risk management frameworks, and coordinating with covered clearing agencies such as the Fixed Income Clearing Corporation (FICC). The temporary relief regarding Rule 17ad-22(e)(6)(i) allows time for indirect market participants to finalise adjustments to their risk models, onboarding processes, and documentation before enforcement begins.
Compliance Timeline & Extensions as per the announcement from US SEC:
- 31 December 2026: Extended compliance deadline for the clearing mandate on cash-market U.S. Treasury transactions (Rule 17ad-22(e)(18)(iv)(A)&(B))
- 30 June 2027: Extended compliance deadline for the clearing mandate on repo transactions in U.S. Treasury securities (Rule 17ad-22(e)(18)(iv)(A)&(B))
- 30 September 2025: Temporary exemption expiration for enforcing the margin separation requirement (Rule 17ad-22(e)(6)(i)), giving CCAs an additional six months beyond the original March 31, 2025 date to fully enforce segregated margin accounts
- 31 March 2025: Compliance deadline for the broker-dealer customer protection rule amendments (Rule 15c3-3) related to U.S. Treasury securities (this date remains unchanged)
US SEC Acting Chairman Mark T. Uyeda stated, “The U.S. Treasury market is a critical piece of the global financial system. New rules must be implemented properly, and any operational issues must be addressed. This one-year extension provides additional time to implement and validate operational changes. Direct participants will also have more time to implement important risk management changes to comply with U.S. Treasury covered clearing agency rules. The Commission stands ready to engage with market participants on issues associated with implementation.”
(Source: https://www.sec.gov/newsroom/press-releases/2025-43, https://www.sec.gov/files/rules/final/2025/34-102487.pdf, https://www.sec.gov/files/rules/exorders/2025/34-102486.pdf)
