Requests for Exemptive Relief Under the SEC Treasury Clearing Rule

Summary

SIFMA ¹ provided comments on notices of request from exemptive relief issued by the U.S. Securities and Exchange Commission (SEC), one from SIFMA ² , and the other in relation to a request from the Institute of International Bankers (IIB) ³ , each requesting an exemption pursuant to Section 36 of the Securities Exchange Act of 1934 ("Exchange Act") from the application of certain aspects of the inter-affiliate exemption in the SEC's Treasury clearing rule. ⁴

Excerpt

Background

The SIFMA Request asked the SEC to, among other things, disapply the Outward-Facing Condition to the Inter-Affiliate Exemption so as not to include Repo Transactions between non-U.S. affiliates and non-U.S. counterparties (including between two non-U.S. affiliates) to the extent the firm is able to meet a certain Proposed Condition, described further in the SIFMA Request. This request was termed the "SIFMA 10 Percent Non-U.S. Affiliate Relief".

The IIB Request asked the SEC to grant an exemption (the "Non-U.S. Transactions Exemption") from the clearing requirement for Eligible Secondary Market Transactions between (i) a Direct Participant that is not a U.S. person (as defined by Exchange Act Rule 3a71-3), a U.S. branch of a non-U.S. person, or non-U.S. person whose obligations under the transaction are guaranteed by a U.S. person (a "Non-U.S. Direct Participant") and (ii) a counterparty that is not a Direct Participant, a U.S. person, a U.S. branch of a non-U.S. person, or a non-U.S. person whose obligations under the transaction are guaranteed by a U.S. person (a "Non-U.S. Client"). In a subsequent comment letter submitted on April 10, 2026 (the "April 10 IIB Letter"), the IIB further proposed exempting those Repo Transactions between a Non-U.S. Client and a foreign affiliate of a Direct Participant from the Outward-Facing Condition, as well as Repo Transactions between a foreign branch of a U.S. Direct Participant and a non-U.S. Client from the clearing requirement. ⁵

On May 29, 2026, the IIB submitted a comment letter (the "May 29 IIB Letter") relating to the SIFMA Request and the IIB Request that reiterated its position that an activity limit or volume-based cap for the Non-U.S. Transactions Exemption was inappropriate.6 It also stated that if the SEC deemed an activity limit or volume-based condition to be appropriate, the SEC should implement a volume cap on the aggregate amount of transactions qualifying for the Non-U.S. Transactions Exemption ("Qualifying Non-U.S. Transactions") entered into by a firm and its affiliates over a specified period. The May 29 IIB Letter proposed the cap for each firm be set at the greater of a (i) firm-specific ratio-based cap, described as a certain specified percentage (the "firm-specific ratio"), or (ii) a fixed dollar threshold, defined as the same specified percentage of market-wide U.S. Treasury repo transactions activity divided by the number of corporate groups having one or more subsidiaries that participate as direct participants at U.S. Treasury CCAs (the "market-wide ratio").