The mandatory clearing of US Treasury repo will apply to all such trades by Netting Members of a US CCP (which currently means FICC but will include CME and ICE). However, there are exemptions to mandatory central clearing. These include inter-affiliate trades, but only if the affiliate then centrally clears all its other repos, writes repo expert Richard Comotto.
Given that most of the repos on the two leading DLT repo platforms — Broadridge DLR and JP Morgan’s Kinexys — are said to be inter-affiliate, the question arises as to the impact of mandatory clearing. Unless FICC and other US CCP start accepting settlement in tokenized Treasuries by 31 June 2027, some inter-affiliate business may have to be pulled from DLT platforms.