Clearing, Risk and Regulation (CRR)

Fundamental Change is coming to the market structure of largest and deepest government debt market in the world.

The Securities and Exchange Commission (SEC) rules, announced in Dec 2023, will fundamentally alter the structure of the US Treasury Markets. A large volume of cash and repo activity that is currently uncleared will be mandated to clear at a central counterparty – the Government Securities Division of the Fixed Income Clearing Corp (FICC) at the Depository Trust and Clearing Corporation (DTCC) (herein “FICC”).

At an absolute minimum, we recommend firms active in the US Treasury Repo and Cash Markets need to analyse their trading flow and understand if the activity is in scope of the mandate. Deadlines for compliance are in 2025 and 2026 but the scope of change is likely to be extensive.

We can provide a full end to end solution covering regulatory advisory, assessment, and implementation. Alternatively, we can enhance your existing project by providing a focused approach to single or multiple areas highlighted in ‘Our Specialisms’.

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Our Expertise

Global Expertise

We have worked in a variety of different markets from across the globe and are adept at applying best practice whilst ensuring alignment to local market conditions, products, participants and regulation.

Global Clients

We have advised CCPs and Exchanges on the design, build and implementation of services, including clearing participant buy-in. Our clients range from international CCPs / exchanges to regional CCPs located in Japan, Australia, Singapore, Hong Kong, Taiwan , Mexico, South Africa, Qatar, Indonesia, Nigeria, and Hungary.

Intellectual Property

We have built up a large library of collateral and intellectual property covering the full range of CCP activities – ‘CCP in a box’ – encompassing governance, risk waterfall structures, workflow, risk management, operations and technology.

Target Operating Model

When advising exchanges / CCPs on new services, not only do we advise on optimal business models but we are experienced at ensuring that we obtain collaboration and buy-in from a range of interested parties – potential clearing participants, investors, regulators and other stakeholders.

Our Specialisms

We help clients take the impact assessments, work with internal stakeholders, and turn this into actionable change.
Whilst clearing for treasuries exist today, new processes will need to be built for the following at a minimum:
- Trading – to ensure cleared activity is routed correctly at the point of trade.
- Client Intermediation – Ensuring your firm implements the right clearing models for your business
- Documentation – new and expanded documentation will need to be put in place to support client activity.
- Pricing – Decisions around how to accurately price the new cleared markets are critical for dealing desks and clearing businesses.
- Margin and collateral – the margin impacts will increase for firms and a key business differentiator
Vendor assessment and implementation as part of this readiness is another core part of the support we can provide.

One of the major areas of change will be in the collateral management operations of banks and clients. There will be large changes in the required margins, and needs to mobilise collateral more quickly. With a cleared market ensuring you are able to meet your margin and settlement obligations becomes even more critical.
This regulatory change, on the back of T+1 settlement in the US, provides organisations an opportunity to re-evaluate the wider collateral operations. This will be a key differentiator for firms and ensuring your cost of funding is controlled is essential to be competitive.
We have deep operational knowledge on collateral operations to support this assessment.

We help clients understand the scope of change required and assess the impacts & opportunity for the business.
Our approach is to follow the lifecycle of the trade, from pricing, execution to matching, through to settlement and return of collateral.
Ensuring that any commercial opportunities can be captured is also a focus of our impact assessments.
Our experts who have worked at the DTCC, Bank of New York Mellon, Banks and CCPs to help guide through the process.
We also ensure we stay close to the industry developments and ensure that you are in line with your peers in collectively addressing the market change.

Our clearing and settlement experts can guide you through the existing regulations and explain the impacts to broad stakeholders.
Beyond the specific regulation, our experts can outline knock-on impacts of the regulation in terms of capital, risk and liquidity.