SEC Exempts Certain Inter-Affiliate and Non-U.S. Repos From Treasury Clearing
The SEC grants targeted relief from Treasury clearing rules for certain inter-affiliate and non-U.S. repo trades after market feedback on implementation.
Summary
On Oct. 30, 2026, the SEC issued Release 2026-111 and an order excluding certain repurchase transactions from the Treasury clearing rules’ definition of eligible secondary market transactions. Relief covers certain repos involving non-U.S. counterparties, subject to unspecified limits and conditions, and certain repos between a direct participant of a U.S. Treasury securities clearing agency and an affiliate that is not an investment company under Section 3 of the Investment Company Act of 1940. The affiliate must otherwise qualify as an affiliated counterparty under Rule 17ad-22(a).
The SEC adopted the clearing rules in December 2023, later extending the original compliance dates to address compliance, operational, and interpretive questions. It created a consolidated implementation webpage in September 2025 and granted the latest relief after public engagement and requests published for comment. Commissioner Mark T. Uyeda, designated by Chairman Paul S. Atkins to oversee the transition, said the action addresses cross-border and implementation concerns while retaining central clearing benefits. Broker-dealers and other participants may contact the Division of Trading and Markets at tradingandmarkets@sec.gov or 202-551-5777 during implementation.
Positives
- Certain repos involving non-U.S. counterparties are excluded from eligible secondary market transactions, subject to specified limits and conditions.
- Qualifying inter-affiliate repos involving a direct participant of a U.S. Treasury securities clearing agency receive targeted relief.
- Extended compliance dates provide broker-dealers and other market participants additional time to prepare for central clearing.
- The September 2025 webpage consolidates implementation updates, FAQs, Commission and staff statements, and related resources.
- Division of Trading and Markets staff remain directly available by email and telephone for implementation questions.
Risks & concerns
- The release does not detail the limits and conditions governing relief for repos involving non-U.S. counterparties.
- Section 3 investment companies do not qualify for the inter-affiliate repo exemption.
- Affiliate relief requires both a clearing agency direct participant and compliance with Rule 17ad-22(a)’s affiliated counterparty definition.
- The SEC previously extended compliance dates because compliance, operational, and interpretive questions required further engagement.
