In the US, currently only FICC clears Treasurys. CME and LCH, mentioned in the article, only clear the derivatives. The article doesn't explicitly make clear where the risk is, on the underlying side (cleared at FICC) or the derivative side (cleared at CME and LCH). Also, FICC considers the MOVE index in its risk management: https://www.dtcc.com/-/media/Files/Downloads/legal/rule-filings/2025/FICC/SR-FICC-2025-003.pdf
My bad, when I say clear treasuries, I mean clear repo transactions. Because this is collateral based lending it attracts different capital charge to interest rate derivative clearing - so in IOSCO-CPMI disclosures tend to be treated as different classes. I was under the impression that CME dominated US treasury Repos, but LCH dominated US IRDs. Have I got that wrong?
Currently, only FICC (specifically the GSD division) clears USD repos. (CME is working to launch its own US Treasury and repo clearing service.) LCH Repo clears European debt. CME dominates the US interest rate futures market. If we're talking USD basis trade, the relevant clearing houses would be FICC and CME.
You are correct. For some reason I assumed CME was a US version of LCH - but it is not. It explains the differences in their IOSCO-CPMI numbers. Will revise my note.
In the US, currently only FICC clears Treasurys. CME and LCH, mentioned in the article, only clear the derivatives. The article doesn't explicitly make clear where the risk is, on the underlying side (cleared at FICC) or the derivative side (cleared at CME and LCH). Also, FICC considers the MOVE index in its risk management: https://www.dtcc.com/-/media/Files/Downloads/legal/rule-filings/2025/FICC/SR-FICC-2025-003.pdf
My bad, when I say clear treasuries, I mean clear repo transactions. Because this is collateral based lending it attracts different capital charge to interest rate derivative clearing - so in IOSCO-CPMI disclosures tend to be treated as different classes. I was under the impression that CME dominated US treasury Repos, but LCH dominated US IRDs. Have I got that wrong?
Currently, only FICC (specifically the GSD division) clears USD repos. (CME is working to launch its own US Treasury and repo clearing service.) LCH Repo clears European debt. CME dominates the US interest rate futures market. If we're talking USD basis trade, the relevant clearing houses would be FICC and CME.
You are correct. For some reason I assumed CME was a US version of LCH - but it is not. It explains the differences in their IOSCO-CPMI numbers. Will revise my note.
Thanks!