Regulatory regulations drive market restructuring

The new central clearing policy implemented by the US SEC will deeply reshape the financial market landscape. According to the regulatory schedule, the conversion of the clearing system for treasury bond spot bond transactions must be completed by the end of 2025, and the transition period for repurchase transactions will be extended to the middle of 2026. This change requires market participants to complete the strategic selection of liquidation mode within a limited time, and the decisions will directly affect their operating costs, regulatory compliance, and business sustainability.

Selection framework for clearing access mode

FICC, as a core clearing institution, provides two major admission paths:

1、 Direct participation mode

Net settlement member: preferred solution for institutions with daily trading volume exceeding 5 billion US dollars, supporting proprietary position clearing and multilateral net settlement, which can reduce settlement risk exposure by 35%

CCIT member: Targeting participants in the third-party repurchase market, requiring net assets of no less than $100 million and reducing counterparty default risk by 42% through centralized clearing

■ Proxy clearing member: assumes full process risk management responsibility, only allows cross client net settlement mode, margin requirements can be reduced by 28%

2、 Indirect participation mode

▶  Sponsored members: relying on the sponsoring institution to access the clearing system, exempt from direct membership requirements, applicable to medium-sized institutions with an annual trading volume of less than 2 billion US dollars

▶  Execution company clients: preferred solution for hedge funds and asset management companies, obtaining market access by paying 0.8% -1.2% channel fees, exempting direct obligations to FICC

Analysis of Key Decision Elements

Choosing a liquidation mode requires a comprehensive evaluation of seven dimensions:

1. Annual transaction size threshold (1 billion/5 billion/10 billion US dollars boundary)

2. Capital adequacy ratio level (measured under the Basel III framework)

3. System integration cost (initial investment of approximately 2-8 million US dollars)

4. Operation team configuration (requires support from a professional team of 15-40 people)

5. Risk bearing ability (stress testing needs to cover a 99% confidence interval)

6. Customer structure characteristics (proportion of institutional customers and business concentration)

7. Regulatory compliance costs (with an average annual budget of 3-12 million US dollars)

dynamic adjustment mechanism

Although the selection of liquidation mode has strategic significance, it allows for later adjustments:

Mode transition window period: Open for application in Q1 each year

Conversion cost estimation: System reconstruction costs account for approximately 60% of the initial investment

Transition period arrangement: FICC filing must be submitted 6 months in advance

Implementation path suggestions

1. Conduct business diagnosis: Establish a transaction data model (covering over 85% of transaction records in the past 3 years)

2. Cost benefit calculation: Compare the 5-year NPV (net present value) of various models

3. Stress testing: Simulating margin fluctuations in various modes under extreme market conditions

4. System compatibility verification: Technical feasibility assessment of interfacing with FICC clearing interface

5. Transition plan design: Develop a phased implementation route for 12-18 months

（Writer：Dick）