A major international derivatives marketplace has recently submitted a request to the Commodity Futures Trading Commission (CFTC) for the expansion of its current cross-margining agreement with The Depository Trust & Clearing Corporation (DTCC). This entity serves as a leading post-trade market infrastructure in the global financial services sector.
In parallel, DTCC intends to make a similar filing with the Securities and Exchange Commission (SEC) soon. The collaboration aims to enhance cross-margining capabilities, thereby providing clients with improved margin savings and capital efficiencies by the end of 2025, pending regulatory approval.
The proposed enhancements would allow eligible clients, who have holdings at both the derivatives marketplace and the Government Securities Division (GSD) of DTCC’s Fixed Income Clearing Corporation (FICC), to experience capital efficiencies when trading U.S. Treasury securities alongside interest rate futures that carry offsetting risk exposures.
To utilize this end-user cross-margining feature, clients must engage with the same Futures Commission Merchant, which is registered with the CFTC, and a broker-dealer, registered with the SEC, at both clearinghouses. Under this new framework, clients would have the option to maintain their positions in qualifying products at both the derivatives marketplace and FICC within a cross-margining account. This account would allow for the margination of the combined risk associated with these positions, thereby optimizing the financial efficiency for participants.