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SIFMA could ask for extension of Treasuries central clearing rule timeline

BY Reuters | TREASURY | 06/06/24 01:04 PM EDT

NEW YORK, June 6 (Reuters) - The Securities Industry and Financial Markets Association (SIFMA) could ask the U.S. Securities and Exchange Commission (SEC) for an extension of the current two-year implementation timeline for a rule expanding central clearing for U.S. Treasuries, said William Thum, managing director for the asset management group at SIFMA.

The SEC in December adopted new rules aimed at reducing systemic risk in the world's biggest bond market by forcing more trades through clearing houses. The rules will be implemented in phases by June 2026.

But work needed to change access models to the Fixed Income Clearing Corporation (FICC), a subsidiary of trade processor DTCC and currently the country's sole clearer for Treasuries, could require more time, Thum said. (Reporting by Davide Barbuscia Editing by Chris Reese)

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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