Sponsoring a clearer world
23 September 2025
Nathaniel Wuerffel, head of market structure and Global Collateral platform product lead at BNY, reviews the upcoming US Treasury central clearing mandate and how the firm aims to navigate the changing regulatory landscape
Image: stock.adobe.com
Repo markets are a vital part of the financial system, providing short-term funding and collateralised investment that support trading desks and help investors earn returns on idle cash. In 2024, the market stands at approximately US$11.9 trillion — roughly two-thirds of which is tied to US Treasuries — and continues to grow and evolve rapidly. Technological advances, regulatory reforms, market structure changes, and shifting macroeconomic conditions are reshaping how repo functions.
A key driver of this transformation is the US Treasury central-clearing mandate, which will reshape the Treasury repo market by moving as much as US$4 trillion of daily trades into central-clearing by June 2027. Drawing on our deep Treasury market expertise, BNY is working alongside clients across collateral, clearing, and financing to help prepare for this shift and navigate implementation with efficiency and confidence.
A market transformation
Under the US Íø±¬³Ô¹Ï and Exchange Commission’s (SEC’s) central clearing rule, almost all repo and reverse repo transactions collateralised by US Treasury securities — where a US Treasury CCP member is a counterparty — must be submitted for clearing.
This represents a significant change for many market participants, requiring adjustments to trading models, operational processes, and collateral management practices. Firms affected by this mandate will need to evaluate how they clear these trades going forward, including which access model best fits their needs and those of their clients.
The Fixed Income Clearing Corporation (FICC) is currently the sole US Treasury CCP, offering direct clearing models for its members and several indirect models, such as Sponsored Service and the Agent Clearing Service, that members can extend to their clients. These models will be complemented by an expansion of FICC’s models, as well as new entrants to the market.
Both the Chicago Mercantile Exchange (CME) and the Intercontinental Exchange (ICE) have announced plans to become Treasury CCPs, providing market participants a broader set of options for meeting the rule. Across the CCPs and models, market participants will need to evaluate how each model impacts their risk management practices, margin requirements, liquidity, and capital costs, which could be significantly different in a centrally cleared marketplace.
Given the US Treasury market underpins global funding, the new central clearing mandate will have far-reaching effects across jurisdictions. It applies consistently to all eligible Treasury repo transactions, regardless of execution venue or counterparty, impacting both US and international participants.
As the world’s largest bond market, Treasuries attract a diverse and global group of dealers, asset managers, hedge funds, and more. By targeting transaction types rather than firm profiles or trade locations, the rule enforces uniform clearing through a CCP for every eligible trade, ensuring more consistent treatment and bolstering market stability.
Figure 1: Impact on cash and repo markets
Leveraging BNY solutions for central clearing efficiency
Because of the unique role BNY holds in the US Treasury market through our clearing, collateral, and financing businesses, we have been working closely with our clients to assist them with complying with the mandate and continuing to grow.
Our Global Collateral platform enables central clearing of US Treasury repo, while preserving the efficiency and liquidity of triparty repo that clients rely on. After selecting their preferred access model, clients can use our standard triparty workflows, with BNY supporting the novation of the transactions directly with the CCP. Triparty processing automates all key collateral tasks, including requirement calculations, daily mark-to-market, and substitutions.
The mandate’s impact on margin requirements has increased demand for margin and capital efficient clearing models, and we are collaborating with CCPs to enable these solutions within triparty. One notable example is FICC’s new Sponsored GC Collateral-in-Lieu model which builds on the existing FICC’s Sponsored GC model, introducing a targeted lien held by FICC over the collateral in the cash investor’s triparty account.
This model eliminates the need to collect clearing funds on the behalf of the cash investor in most cases, and removes the sponsor’s obligation to guarantee the performance of the cash investor to FICC. This could result in significant financial resource cost savings for dealers. Complementing this, the Agent Clearing Service, which is available today for bilateral repo, will provide dealers with the ability to net down margin across clients within a non-segregated model, delivering further savings for dealers managing a matched book. Its introduction to triparty will provide market participants with additional flexibility in choosing how to clear their client trades.
Many market participants seek more scalable clearing models alongside margin and capital-efficient solutions. Currently, centrally cleared repo trades are executed on a ‘done-with’ basis, where the sponsoring member both executes the trade and submits it to clearing. We are working to enable ‘done-away’ sponsored clearing on our collateral platform. This model separates clearing from execution, allowing FICC netting members to enter Treasury repo transactions with existing counterparties sponsored by a separate clearing agent active on our collateral platform.
This would allow FICC members to retain their existing trading relationships without having to establish sponsored relationships with all counterparties — a process that can take 6 to 12 months due to extended legal negotiations and require significant operational and infrastructure investment.
While this functionality will be available for any sponsor active on our collateral platform, BNY is one of the largest ‘done-with’ sponsors in the Treasury repo market, and we plan to complement this offering by acting as a ‘done-away’ agent to our clients.
Figure 2: FICC Sponsored Repo Service growth
Adapting to an evolving US Treasury repo market
The US Treasury central clearing mandate marks a pivotal transformation for the repo market, reshaping risk management, collateral practices, and operational workflows. As the market moves toward greater transparency and consistency, firms will need to adapt their clearing strategies thoughtfully to navigate new access models, margin requirements, and liquidity considerations.
BNY’s Global Collateral platform, together with the suite of central clearing products that we offer through our clearing, financing, and margin businesses, positions us to support clients through this transition — helping preserve market liquidity and foster growth. By approaching these changes proactively, market participants can ensure compliance while unlocking new opportunities in a more resilient and interconnected Treasury repo market.
A key driver of this transformation is the US Treasury central-clearing mandate, which will reshape the Treasury repo market by moving as much as US$4 trillion of daily trades into central-clearing by June 2027. Drawing on our deep Treasury market expertise, BNY is working alongside clients across collateral, clearing, and financing to help prepare for this shift and navigate implementation with efficiency and confidence.
A market transformation
Under the US Íø±¬³Ô¹Ï and Exchange Commission’s (SEC’s) central clearing rule, almost all repo and reverse repo transactions collateralised by US Treasury securities — where a US Treasury CCP member is a counterparty — must be submitted for clearing.
This represents a significant change for many market participants, requiring adjustments to trading models, operational processes, and collateral management practices. Firms affected by this mandate will need to evaluate how they clear these trades going forward, including which access model best fits their needs and those of their clients.
The Fixed Income Clearing Corporation (FICC) is currently the sole US Treasury CCP, offering direct clearing models for its members and several indirect models, such as Sponsored Service and the Agent Clearing Service, that members can extend to their clients. These models will be complemented by an expansion of FICC’s models, as well as new entrants to the market.
Both the Chicago Mercantile Exchange (CME) and the Intercontinental Exchange (ICE) have announced plans to become Treasury CCPs, providing market participants a broader set of options for meeting the rule. Across the CCPs and models, market participants will need to evaluate how each model impacts their risk management practices, margin requirements, liquidity, and capital costs, which could be significantly different in a centrally cleared marketplace.
Given the US Treasury market underpins global funding, the new central clearing mandate will have far-reaching effects across jurisdictions. It applies consistently to all eligible Treasury repo transactions, regardless of execution venue or counterparty, impacting both US and international participants.
As the world’s largest bond market, Treasuries attract a diverse and global group of dealers, asset managers, hedge funds, and more. By targeting transaction types rather than firm profiles or trade locations, the rule enforces uniform clearing through a CCP for every eligible trade, ensuring more consistent treatment and bolstering market stability.
Figure 1: Impact on cash and repo markets
Leveraging BNY solutions for central clearing efficiency
Because of the unique role BNY holds in the US Treasury market through our clearing, collateral, and financing businesses, we have been working closely with our clients to assist them with complying with the mandate and continuing to grow.
Our Global Collateral platform enables central clearing of US Treasury repo, while preserving the efficiency and liquidity of triparty repo that clients rely on. After selecting their preferred access model, clients can use our standard triparty workflows, with BNY supporting the novation of the transactions directly with the CCP. Triparty processing automates all key collateral tasks, including requirement calculations, daily mark-to-market, and substitutions.
The mandate’s impact on margin requirements has increased demand for margin and capital efficient clearing models, and we are collaborating with CCPs to enable these solutions within triparty. One notable example is FICC’s new Sponsored GC Collateral-in-Lieu model which builds on the existing FICC’s Sponsored GC model, introducing a targeted lien held by FICC over the collateral in the cash investor’s triparty account.
This model eliminates the need to collect clearing funds on the behalf of the cash investor in most cases, and removes the sponsor’s obligation to guarantee the performance of the cash investor to FICC. This could result in significant financial resource cost savings for dealers. Complementing this, the Agent Clearing Service, which is available today for bilateral repo, will provide dealers with the ability to net down margin across clients within a non-segregated model, delivering further savings for dealers managing a matched book. Its introduction to triparty will provide market participants with additional flexibility in choosing how to clear their client trades.
Many market participants seek more scalable clearing models alongside margin and capital-efficient solutions. Currently, centrally cleared repo trades are executed on a ‘done-with’ basis, where the sponsoring member both executes the trade and submits it to clearing. We are working to enable ‘done-away’ sponsored clearing on our collateral platform. This model separates clearing from execution, allowing FICC netting members to enter Treasury repo transactions with existing counterparties sponsored by a separate clearing agent active on our collateral platform.
This would allow FICC members to retain their existing trading relationships without having to establish sponsored relationships with all counterparties — a process that can take 6 to 12 months due to extended legal negotiations and require significant operational and infrastructure investment.
While this functionality will be available for any sponsor active on our collateral platform, BNY is one of the largest ‘done-with’ sponsors in the Treasury repo market, and we plan to complement this offering by acting as a ‘done-away’ agent to our clients.
Figure 2: FICC Sponsored Repo Service growth
Adapting to an evolving US Treasury repo market
The US Treasury central clearing mandate marks a pivotal transformation for the repo market, reshaping risk management, collateral practices, and operational workflows. As the market moves toward greater transparency and consistency, firms will need to adapt their clearing strategies thoughtfully to navigate new access models, margin requirements, and liquidity considerations.
BNY’s Global Collateral platform, together with the suite of central clearing products that we offer through our clearing, financing, and margin businesses, positions us to support clients through this transition — helping preserve market liquidity and foster growth. By approaching these changes proactively, market participants can ensure compliance while unlocking new opportunities in a more resilient and interconnected Treasury repo market.
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