CFTC Acting Chairman Pham Announces Implementation of U.S. Treasury Market Reforms

2025-12-15 · Regulation · QuoteReporter

Summary

The Commodity Futures Trading Commission (CFTC), under the leadership of Acting Chairman Caroline D. Pham, has approved a proposed order to extend the cross-margining program currently operational between the Chicago Mercantile Exchange Inc. (CME) and the Fixed Income Clearing Corporation (FICC) to include certain customers. This initiative is part of broader U.S. Treasury market reforms aimed at enhancing liquidity and stability in this crucial financial market.

Key Details

The proposed order grants a limited exemption allowing the expansion of the CME-FICC cross-margining arrangement to customers, previously restricted to clearing members only. This arrangement enables the cross-margining of futures positions in U.S. Treasury securities cleared at CME with cash market positions in U.S. Treasury securities cleared at FICC. The expansion comes with appropriate safeguards to maintain market integrity and protect involved parties.

Acting Chairman Pham emphasized the CFTC’s commitment to collaborating with the Securities and Exchange Commission (SEC) to implement these reforms. The proposal aligns with recommendations from the CFTC Global Markets Advisory Committee and adheres to the SEC’s U.S. Treasury clearing mandate, as referenced in CFTC press release No. 8860-24.

Implications

By allowing certain customers to participate in the cross-margining program, the CFTC aims to provide capital efficiencies that could significantly enhance liquidity and resiliency in the market for U.S. Treasuries. This is expected to benefit a wide range of market participants by reducing the capital required to trade and hedge in these securities, potentially leading to more active trading and a more robust market environment.

Background

The cross-margining program between CME and FICC has historically been limited to clearing members, restricting broader market access to these capital efficiencies. The proposed expansion to include customers is a strategic move to broaden participation and support the overall health and stability of the U.S. Treasury market, which is vital for global finance.

Next Steps

The CFTC has opened the proposal for public comment, with submissions due 30 days following its publication in the Federal Register. Market participants and other stakeholders are encouraged to submit their comments electronically through the CFTC Comments online process. Following the comment period, the CFTC will review feedback and proceed with finalizing the order. All comments received will be made publicly available on the CFTC website, ensuring transparency in the rule-making process.

Original CFTC Announcement

Title: Acting Chairman Pham Announces Implementation of U.S. Treasury Market Reforms
Date: 2025-12-15
Source: CFTC.gov