ANALYSIS: CME prepares move into $29tn US Treasuries clearing market

Derivatives clearing houses such as the CME, Intercontinental Exchange and LSE Group’s LCH are eyeing the vast, $29tn (£21.6tn) US Treasuries market as a potentially lucrative opportunity.

CME’s playbook is to offer margin offsets between US cash Treasuries and the US Treasury futures and options already cleared at CME, potentially offering decent savings to firms that trade both products.

There are, however, some nuances to the US Treasuries market that make it different to the futures and options space where CME has traditionally operated.

First is that in Treasuries, it is normal for clients to use one firm to handle execution and clearing, known as “done-with”, while the new SEC mandate is expected to support the adoption of the “done-away” model, where different firms do execution and clearing, which is typical in futures and options.

This should promote competition among brokers and open the door to futures clearing houses like CME, argues Suzanne Sprague, the US group’s chief operating officer and global head of clearing.

“In futures and options, it is normal to separate execution and clearing so we feel we are well positioned to support the done-away model in US Treasuries,” Sprague said.

There is another important distinction in the US Treasuries market, the CME head of clearing said: “The difference in cash Treasuries, however, is the balance-sheet impact on the clearing members.

“Some clearing models, for example, require the cash Treasury positions to be reflected on the balance sheet whereas we are enabling end-clients to settle securities directly with the clearing house to minimise the balance sheet impact on clearing members.”

CME Group and the Depository Trust & Clearing Corporation, which runs the incumbent US Treasuries clearing service, launched in January 2024 a cross-margining service that connects DTCC’s cash Treasuries and CME’s US Treasury futures and options.

The two firms followed this up by announcing in February 2025 an enhancement to the original agreement to provide these margin savings to end clients before the end of this year.

In parallel, Sprague and her team are working on a multi-year product to migrate all of CME’s various products and the firms that trade them to the SPAN 2 margin framework from the previous SPAN model.

SPAN 2 relies on the Value-At-Risk margin methodology which offers greater flexibility in calculating and calling margin, thereby potentially avoiding massive and unexpected margin calls in times of extreme market stress.

CME Group is following a roadmap to manage a phased migration of its various markets to the new methodology.

Sprague said: “We are in the process of migrating to SPAN 2 for all asset classes. So far we have migrated energy and equity derivatives and interest rate swapsare on a similar margin methodology.US Treasury clearing will utilise SPAN 2 when the clearing service goes live, subject to regulatory approval.”

She continued: “Interest rate futures and options are also on our roadmap and we plan to bring those, with foreign exchange derivatives, into the SPAN 2 methodology next year. After that, the last phase will be the migration of remaining products including agricultural and metals products.”

CME’s move into US Treasury clearing could line the US group up against DTCC, Intercontinental Exchange and LCH, all of which have expressed an interest in launching new services to coincide with the regulatory mandate.

ICE Clear Credit’s chief commercial officer Paul Hamill said in May: “We’re targeting testing in June, aiming to be fully operational for a cash Treasury launch later this year, pending required regulatory approval.”

CME’s US interest rate futures and options products traded 960 million lots in the second quarter of 2025, according to FOW Data, up 18% on the three months to the end of June last year.

The second part of this article will be published on Monday July 21.