US Securities Regulator Exempts Certain Foreign Repo Transactions From Treasury Clearing Rules

October 31, 2026 | By Semahegn Nigatu

The US Securities and Exchange Commission (SEC) has granted exemptions for certain repurchase agreement (repo) transactions involving foreign counterparties and affiliated financial institutions, adjusting the scope of its central-clearing requirements for US Treasury securities.

The relief excludes specified transactions from the definition of eligible secondary market transactions under the regulator's Treasury clearing framework. It covers certain repo agreements involving non-US counterparties, as well as transactions between direct participants in US Treasury securities clearing agencies and qualifying affiliated entities.

For transactions involving foreign counterparties, the exemption is subject to specified limits and conditions. The second exemption applies to repo transactions between a direct participant of a US Treasury securities clearing agency and an affiliated entity that is not an investment company under the Investment Company Act of 1940, provided the affiliate meets the regulatory definition of an affiliated counterparty under Rule 17ad-22(a).

The decision follows requests from market participants for relief and clarification on how the clearing requirements apply to these transactions. The SEC said it had undertaken extensive public engagement, including publishing exemption requests for public comment, before issuing the latest decision.

The regulator adopted its US Treasury clearing rules in December 2023, requiring greater use of central clearing for transactions in US government securities. The framework is intended to expand the role of central counterparties in processing Treasury transactions.

However, implementation has raised compliance, operational and interpretive questions among financial institutions and other market participants. In response, the SEC extended the original compliance deadlines in 2025 to provide additional time for firms to prepare and address outstanding implementation issues.

In September 2025, the regulator also launched a dedicated webpage consolidating implementation updates, frequently asked questions, commission and staff statements, and other guidance.

Mark T. Uyeda, an SEC commissioner designated by Chairman Paul Atkins to lead the agency's Treasury clearing implementation initiative, said the exemptions addressed practical concerns while preserving the benefits of central clearing.

"Successful implementation requires a thoughtful approach that must account for the realities of cross-border transactions," Uyeda said.

The latest relief forms part of the SEC's continuing efforts to facilitate the transition to central clearing while addressing the operational challenges associated with certain foreign and intra-group repo transactions.

Source: FSX Business News