Thank you to all of the firms that submitted responses to ISDA’s survey regarding ongoing efforts to incentivize and/or potentially require additional clearing of US Treasury (UST) securities and repos. ISDA has published a report summarizing the results of the survey on an aggregated and anonymized basis.
ISDA’s survey sought feedback on the legal, operational, regulatory (including market regulation and capital implications) and policy issues associated with UST clearing, with a focus on client clearing and how reforms in this market would impact the derivatives markets. ISDA conducted the survey in response to discussions by policy makers and market participants about the merits of further clearing of US Treasuries and whether this would strengthen the resilience of the market during stress events.
The results of the survey shows there is a wide variety of views on whether increased clearing would materially improve the resilience and efficiency of cash Treasury securities and repos, suggesting further research on the costs and benefits is necessary. While most respondents were generally supportive of clearing, there was little backing for broad clearing mandates, with warnings that it could result in some participants reducing their activity or withdrawing from the market, potentially reducing liquidity.