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CME Group and the Depository Trust & Clearing Corporation (DTCC) have announced plans to expand their cross-margining arrangement to provide end users with increased margin savings and capital efficiencies by December 2025.
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The enhancement, pending regulatory approval, will allow eligible end user clients at both CME Group and DTCC's Fixed Income Clearing Corporation (FICC) Government Securities Division (GSD) to access capital efficiencies when trading U.S. Treasury securities and CME Group interest rate futures with offsetting risk exposures.
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To participate in the arrangement, clients will need to use the same dually registered Futures Commission Merchant (FCM) and broker/dealer at both central counterparty clearing houses (CCPs). The timing aligns with the regulatory timeline for expanded U.S. Treasury clearing requirements, which aims to encourage greater utilisation of central clearing and reduce systemic risk.
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"Bringing the benefits of cross-margining to the end-user is a critical step in enhancing capital efficiencies across U.S. Treasury market participants," said Laura Klimpel, Managing Director and Head of DTCC's Fixed Income and Financing Solutions. "Our ongoing collaboration with CME Group remains focused on extending cross-margin benefits to more customer accounts and eventually, to other products. Doing so will enable even greater efficiency, cost reduction, improved liquidity and increased risk management in the U.S. Treasury markets."
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"Extending our cross-margining agreement to client accounts is an important milestone in our efforts to make U.S. Treasury markets more efficient for all market users," said Suzanne Sprague, CME Group Chief Operating Officer and Global Head of Clearing and Post-Trade Services. "Building on more than 20 years of partnership, we look forward to working with DTCC and regulators to deliver even greater benefits to both cash and futures market participants."
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Under the proposed arrangement, FICC will designate cross-margin accounts that allow eligible positions to offset with eligible CME Group interest rate futures. CME Group will enable participants to direct futures to end-user cross-margin accounts throughout the day, making them available for offset in the arrangement.
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Ahead of regulatory approvals, end-users can prepare by setting up new accounts, completing the required legal documentation, and testing end-to-end workflows.
