SEC Extends Compliance Dates and Provides Temporary Exemption for Rule Related to Clearing of U.S. Treasury Securities

On February 25, 2025, the SEC extended the compliance dates for Rule 17ad-22(e)(18)(iv)(A) and (B) under the Securities Exchange Act for eligible cash market transactions by one year to December 31, 2026, and for eligible repo market transactions to June 30, 2027.  The SEC issued a cancellation notice for its originally scheduled February 26, 2025, meeting where the compliance dates were the sole item on the agenda.  

Rule 17ad-22(e)(18)(iv)(A) and (B) mandates that covered clearing agencies providing central counterparty services for U.S. Treasury securities develop and enforce written policies and procedures designed to ensure that all direct participants submit for clearing and settlement any eligible secondary market transactions in U.S. Treasury securities where they are a counterparty. Additionally, covered clearing agencies must monitor these submissions and outline measures to address any failure to comply.

The SEC also granted a temporary exemption related to Exchange Act Rule 17ad-22(e)(6)(i).  Rule 17ad-22(e)(6)(i) requires covered clearing agencies to establish policies and procedures ensuring that margin amounts collected from a direct participant for its proprietary U.S. Treasury securities positions are calculated, collected, and held separately from margin collected in connection with transactions involving indirect participants relying on the direct participant’s services to access the clearing agency’s payment, clearing, or settlement facilities.  Compliance with the rule has been postponed from the original deadline of March 31, 2025, to a new deadline of September 30, 2025.

Read the SEC’s press release, updated final rule, and exemptive order.