Hedge funds and brokerages have new requirements from the Securities and Exchange Commission to centrally clear far more of their US Treasuries trades in a structural overhaul for the $26 trillion market.
The SEC voted Wednesday to require that all transactions involving repurchase agreements use clearinghouses, which sit between buyers and sellers to complete transactions. In a partial win for hedge funds, they would be exempt from having to centrally clear their cash Treasuries trades, according to the agency. Still, the new rules could bolster oversight of highly leveraged strategies such as the so-called basis trade — which use the repo market and that US officials say can pose broad dangers.