TRADE CLEARING ELIGIBILITY TOOL·SEC RULE 17AD‑22(E)(18)
USTC stands for U.S. Treasury Clearing. This interactive flowchart determines whether a given U.S. Treasury cash or repo trade must be submitted for central clearing under the SEC's Treasury Clearing Mandate.
Exhibit 1
Every U.S. Treasury trade passes through three common gates shown below, then branches by cash outright vs. repo / reverse repo. Part of the USTC reference guide.
Pinch to zoom in on any step — the cash path runs down the left, repo/reverse‑repo down the right.
Glossary
A registered clearing agency (such as FICC's Government Securities Division) that provides clearing services for U.S. Treasury securities. The clearing mandate applies only to transactions in an instrument type the CCA has accepted for clearing — the basis for the "CCA-eligible instrument?" check above.
A broker operating between dealers, often facilitating anonymous matched trading in U.S. Treasury markets.
A registered entity that buys and sells securities for its own account or on behalf of customers.
A broker‑dealer specifically registered to transact in U.S. government securities.
A counterparty not required to clear under the mandate — including central banks, sovereigns, international financial institutions (IFIs), and natural persons.
A firm that is a direct member of the clearing agency (FICC GSD) and can submit trades for central clearing.
A trade between two legal entities under common control, subject to specific clearing exemptions and conditions.
A general collateral (GC) triparty repo where U.S. Treasury securities are merely one of several eligible instrument types on a collateral eligibility schedule, rather than the specific security selected at trade execution. Per SEC staff guidance, such a transaction is not treated as an "eligible secondary market transaction" and is not required to clear — a repo where Treasury securities are the specific instrument selected at execution is covered.
A lending transaction involving securities rather than cash. The clearing mandate's "eligible secondary market transaction" definition covers only (1) a repo/reverse repo collateralized by U.S. Treasury securities or (2) a qualifying purchase/sale of U.S. Treasury securities — a securities loan is neither, so it falls outside the mandate by definition rather than through a separate carve‑out.
A covered clearing agency providing central counterparty services (or an entity regulated as a central counterparty in its home jurisdiction), interposing itself between counterparties and guaranteeing settlement.
A registered derivatives clearing organization. A repo where the counterparty is itself a CCP or DCO is a separate, repo‑specific exclusion from the mandate.
A U.S. state or local government entity acting as the repo counterparty. Repos collateralized by U.S. Treasury securities are excluded from the "eligible secondary market transaction" definition when one counterparty is a state or local government — a distinct, repo‑specific exclusion, separate from the central bank / sovereign / international financial institution (IFI) exclusion already captured by the common "Exempt counterparty?" gate above.
Practitioner Q&A
It depends on three checks that apply to every trade: whether the instrument is CCA‑eligible, whether either counterparty is exempt (central banks, sovereigns, IFIs, or natural persons), and whether it's a securities loan rather than a repo or cash trade. Repo trades that clear these gates are then tested against additional repo‑specific exclusions — basket repos, CCP/DCO counterparties, and government counterparties — before a final determination. Walk through the interactive flowchart above for the full decision path.
The pink bar near the top ("Not Required to Clear" after the three common gates) means the mandate doesn't apply at all — the instrument is out of scope, the counterparty is exempt, or it's a securities loan rather than a covered transaction. The pink outcomes further down the repo branch are different: those are trades that already passed the common gates but qualify for a specific, repo‑only statutory exclusion (basket repo, CCP/DCO counterparty, or government counterparty).
SEC Rule 17Ad‑22(e)(18) applies to any covered clearing agency (CCA) providing central counterparty services for U.S. Treasury securities. Today that CCA framework spans FICC's Government Securities Division, CME, and ICE.
Trades where a counterparty is a central bank, sovereign entity, international financial institution (IFI), or natural person are exempt from the clearing requirement. Repo trades also carry additional exclusions — for basket (general collateral) repos, trades where the counterparty is itself a CCP or DCO, and trades with a state or local government counterparty.
Cash outright trades only pass through the three common gates before reaching a determination. Repo and reverse repo trades face those same common gates, then four additional repo‑specific checks (direct participant, basket repo, CCP/DCO or government counterparty, and inter‑affiliate) — reflecting the wider range of repo structures and the exemptive relief the SEC has carved out specifically for repo activity.
AKONCEPT Consulting Americas LLC helps trading, operations, and compliance teams work through USTC readiness — from eligibility mapping to sponsor and custodian model selection.
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