The Securities and Exchange Commission has signed off on a plan that lets customers cross-margin U.S. Treasury securities with related futures, a shift that could trim clearing costs for funds and other end-users as the market moves toward mandatory central clearing. Under the new framework, eligible customers would be able to elect to have Treasury positions cleared at FICC carried and margined in futures accounts alongside CME-cleared futures instead of being margined separately. The goal is to cut what market participants call “double margining,” although any customer that opts in will face trade-offs in custody and bankruptcy treatment.
How the announcement was reported
As first reported by Reuters, the SEC on Wednesday issued an exemptive order and approved related rule changes to allow customer cross-margining between the Fixed Income Clearing Corporation and the Chicago Mercantile Exchange. Reuters noted that the decision followed filings from FICC and CME and months of industry lobbying aimed at avoiding duplicate margining costs for clients that clear across both systems.
How cross-margining would work
Detailed filings submitted to the commission spell out the mechanics. Broker-dealers that are also futures commission merchants (BD-FCMs) could carry certain customer Treasury securities in a futures account and have margin calculated across the combined portfolio, according to the SEC. Participating customers would elect in writing to have their FICC-cleared Treasury positions and associated margin treated as part of a cross-margining portfolio with CME-cleared futures, and FICC would record XM customer positions in designated accounts on its books.
Why regulators backed the change
Regulators have argued that cross-margining can boost efficiency and resilience by tying initial margin more closely to actual portfolio risk instead of charging separate margins for offsetting cash and futures positions. The Commodity Futures Trading Commission highlighted those benefits when it proposed complementary exemptive relief in December 2025, saying expanded cross-margining "will provide capital efficiencies that can increase liquidity and resiliency" in the Treasury market in a CFTC statement.
Protections — and the legal trade-offs
The filings and related orders build in safeguards but also come with compromises. Under the proposed customer framework, customers that opt into cross-margining agree that their XM securities positions will not receive broker-dealer customer treatment under SIPA and Exchange Act Rule 15c3-3. Instead, those assets and related margin are carried under futures account protections governed by the Commodity Exchange Act and CFTC rules, according to the SEC application. The proposals call for segregation of XM customer margin, special custody arrangements that include FICC holding XM customer margin in an account at the Federal Reserve Bank of New York or in an FDIC-insured bank account, and subordination or other contractual tools designed to preserve priority for customer claims under the futures-account regime.
Industry response and next steps
Buy-side groups have largely cheered the move. The Managed Funds Association said in a January comment letter and follow-up statements that expanding cross-margining would lower clearing costs and improve liquidity for customers. In parallel, the SEC has been working through rule filings. The agency published a Federal Register notice on April 10 providing a "notice of no objection" to a related advance filing, and FICC still must finalize GSD rule amendments and secure any additional regulatory approvals before the changes can go live, according to the Federal Register notice.
What to expect now
This is not a single-switch transformation for markets. Exchanges and clearinghouses still need to complete rule amendments, run operational testing and push through client documentation before customers can opt in, and any rollout will be phased in alongside the broader Treasury clearing timeline. Market participants have already been preparing for the SEC’s Treasury-clearing regime, with compliance dates stretching through year-end 2026 for cash and into mid-2027 for certain repo segments, and firms will use the coming months to test technology, update agreements and onboard clients before customer cross-margining becomes widely used.
For market players in New York and Washington, the move marks a meaningful step toward lowering the cost of central clearing. The real verdict will come later, when all the paperwork, testing and industry haggling show how much customers actually save and how fast those savings arrive.
