NYSE Owner Gets SEC Approval for Treasury Clearinghouse

(Bloomberg) -- Intercontinental Exchange Inc. won approval to operate a clearinghouse for US Treasuries, becoming the latest provider of the service under new regulations for the world’s largest debt market. 

The firm plans to clear US Treasuries after it got permission from the US Securities and Exchange Commission to operate, according to Paul Hamill, chief commercial officer of the company’s ICE Clear Credit unit. This service is now live, and preparing to add repurchase agreements by the end of the year. 

“There is demand for competition and improvements and modernization of the Treasury market,” which is growing in size, Hamill said in an interview.

ICE Clear Credit will allow for both done-away trades, where the customer uses a different dealer as clearing agent, and done-with trades, where a dealer acts as the clearing agent for a trade. Hamill’s firm expects to add repurchase agreements later in 2026, after a period of testing.

“You need to have a viable solution to support both” in clearing Treasury and repo trades, he said. 

Clearing in the $30 trillion Treasury market previously had just one registered central clearing house, Fixed Income Clearing Corp., a subsidiary of Depository Trust & Clearing Corp. CME Group Inc. has also expressed interest in becoming a central clearer for US government debt and got its approval in December.

“This is the first time there will be true competition and choice for clearing in the Treasury market in its long history,” Hamill said. 

CME and ICE, which is the parent of the New York Stock Exchange, made the moves in response to an SEC rule that requires eligible trades involving Treasury securities and repurchase agreements to be centrally cleared. Market participants have until the end of 2026 to meet the new clearing rules for Treasuries and by June 30, 2027, for repo transactions.

The mandate was one of the signature policy changes finalized under former SEC Chair Gary Gensler. It is intended to help stave off financial shocks in the Treasuries market.

Clearinghouses act as intermediaries between buyers and sellers and assume ultimate responsibility for completion of transactions. This reduces the chance of a default by one firm triggering wider losses in the financial system. 

ICE Clear Credit, which handles credit derivatives, is an SEC-registered clearing agency founded in 2009. It’s also a designated systemically important financial market utility, or SIFMU, by the Financial Stability Oversight Council, and deemed a qualified central counterparty under US bank capital rules.

The new Treasury clearing unit will be separate from ICE’s existing credit default swap clearing offering, with its own rulebook, membership and governance structure, Hamill said. 

“They are two different products, and need to operate with two different risk frameworks,” he said. 

--With assistance from Lydia Beyoud.

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