Division of Trading and Markets: Frequently Asked Questions – Treasury Clearing

Responses to Frequently Asked Questions Regarding the Treasury Clearing Rule (September 30, 2025)

The Division of Trading and Markets (“Division”), U.S. Securities and Exchange Commission (“Commission”), has prepared the following responses to questions about certain aspects of Commission Rule 17ad-22, including the definition of an eligible secondary market transaction, related to the central clearing of U.S. Treasury securities. These responses represent the views of the staff of the Division. They are not a rule, regulation, or statement of the Commission. The Commission has neither approved nor disapproved this content. These responses, like all staff statements, have no legal force or effect: they do not alter or amend applicable law, and they create no new or additional obligations for any person.

The staff may update these questions and answers periodically.  In each update, the questions added after publication of the last version will be marked with “MODIFIED” or “NEW.”

General collateral triparty repo transactions in which U.S. Treasury securities are allocated based on a “collateral eligibility schedule” (i.e., mixed CUSIP triparty repo)

Question 1: Does the definition of an “eligible secondary market transaction” in Rule 17ad-22(a) necessarily include general collateral triparty repos in which U.S. Treasury securities are included in the collateral eligibility schedule and are allocated as collateral as part of the settlement process?

Answer: No. When the Commission adopted Rule 17ad-22(e)(18)(iv), it stated that it understood that market participants may use U.S. Treasury securities as “permissible substitutions for other types of collateral” and stated that market participants generally should not consider mixed CUSIP triparty repos resulting from such a permissible substitution as an eligible secondary market transaction.[1] The Commission further stated that, to the extent that a mixed CUSIP triparty repo contains U.S. Treasury CUSIPs from the outset of the transaction, such a transaction would be included in the scope of the definition of an eligible secondary market transaction, and that an exclusion for such transactions is not necessary because the counterparties “specifically structured” the transaction to include U.S. Treasury securities.[2] 

Similarly, the staff understands that, typically, entities who wish to transact with each other in general collateral triparty repo pre-select, in advance of any specific transaction, which types of eligible securities the triparty agent may allocate to fill any shortfall in the event that a counterparty does not have sufficient securities of the collateral types chosen at trade execution to settle that particular transaction. This list of pre-selected collateral types that may be allocated when there is a shortfall is often referred to as a “collateral eligibility schedule.” The staff understands that the parties will specify at trade execution (i.e., the outset) of a particular transaction the type of general collateral that would be used for matching purposes, and that the transaction is associated with a specific pre-selected collateral eligibility schedule.[3]

The staff further understands that most triparty repo collateral eligibility schedules allow allocation of U.S. Treasury securities as the most creditworthy collateral type that can be used in place of any other collateral to complete settlement.  For example, counterparties to a general collateral repo trade may select a matching CUSIP corresponding to U.S. government agency securities as the collateral type at trade execution. However, U.S. Treasury securities may be allocated as collateral at settlement if there is a shortfall of the U.S. government agency securities collateral, and U.S. Treasury securities are included on the parties’ collateral eligibility schedule.[4]

Inclusion of U.S. Treasury securities as eligible collateral on a collateral eligibility schedule should not be considered as specifically structuring a particular triparty repo transaction to include U.S. Treasury securities. If the parties intend to use non-U.S. Treasury securities as indicated by the collateral type selected at trade execution, then the transaction does not become an eligible secondary market transaction merely because U.S. Treasury securities are later allocated to complete settlement for that particular transaction. Instead, determining whether a particular triparty repo transaction is specifically structured to include U.S. Treasury securities should be based upon objective indicators at trade execution, e.g., the collateral type the parties select, as identified via a collateral matching mechanism, such as a matching CUSIP.

Therefore, consistent with the Commission’s discussion in the Adopting Release described above, the staff does not believe that a mixed CUSIP triparty repo, in which U.S. Treasury securities are allocated as collateral based on a “collateral eligibility schedule” is an “eligible secondary market transaction” when the parties have selected a matching CUSIP (or similar collateral matching mechanism) at trade execution corresponding to securities other than U.S. Treasury securities.