The Securities and Exchange Commission approved a proposed rule change by the Fixed Income Clearing Corporation on December 22, 2025, enabling the introduction of the ACS Triparty Service within FICC's Government Securities Division. This new offering expands the Agent Clearing Service to include triparty repo transactions involving securities represented by generic CUSIP numbers, facilitating greater access to central clearing for indirect participants. Published in the Federal Register on December 30, 2025, the approval aims to address operational and regulatory hurdles that prevent some entities from directly engaging with FICC's clearance and settlement systems. By modeling aspects of the service after the existing Sponsored GC Service, FICC seeks to promote efficiency in the U.S. Government securities market while maintaining robust risk management. This move comes amid ongoing efforts to broaden central clearing participation, potentially reducing systemic risks in repo markets.
Background on FICC's Indirect Participant Access Models
FICC operates as a central counterparty in the U.S. Government securities market, providing trade comparison, netting, risk management, and settlement services through its Government Securities Division. In 2024, FICC consolidated its correspondent clearing and prime broker services into the Agent Clearing Service, as detailed in SEC Release No. 101694. This service enables Netting Members, designated as Agent Clearing Members, to submit transactions on behalf of indirect participants known as Executing Firm Customers. These can be 'done-with' transactions between the customer and the Agent Clearing Member or 'done-away' trades involving other Netting Members or their indirect participants.
The Agent Clearing Service addresses access challenges for entities facing regulatory, cost, legal, operational, or jurisdictional barriers to direct membership, according to FICC's filing in the Notice of Filing (SEC Release No. 104084). It allows margin calculations on a net basis across customers in the same account, resulting in lower obligations compared to the Sponsored Service. Additionally, an industry opinion from SIFMA indicates that the service perfects security interests under New York's UCC Articles 8 and 9 without requiring financing statements, streamlining collateral management.
In contrast, the Sponsored Service, governed by Rule 3A, permits Sponsoring Members to bring Sponsored Members into limited membership for certain trades. Both models position the direct member as fully liable for indirect participants' obligations, but they differ in transaction scope, haircut treatment, and novation of start legs. The Sponsored GC Service, introduced in 2021 (SEC Releases Nos. 92808 and 92799), already supports triparty repos settling through a clearing agent's platform, where collateral management is handled externally.
Key Features of the Proposed ACS Triparty Service
The ACS Triparty Service introduces triparty repo transactions (ACS Triparty Trades) into the Agent Clearing Service, allowing Executing Firm Customers to engage in done-with or done-away trades using generic CUSIP securities. As outlined in the proposed amendments to Rule 8, these trades settle the start leg grossly between pre-novation counterparties via a triparty platform, with the end leg eligible for novation upon completion. FICC incorporates features from the Sponsored GC Service, such as identical eligible securities schedules, optional initial haircuts, and treatment as GCF Repo Transactions for margin purposes.
Trades are recorded in an Agent Clearing Member Omnibus Account for netting benefits or a Segregated Indirect Participants Account for isolated risk profiling. Margin and liquidity calculations, including the Capped Contingency Liquidity Facility under Rule 22A, treat these trades similarly to Sponsored GC Trades. Daily repo interest and mark-to-market adjustments occur directly between counterparties through the triparty platform, with FICC handling only Forward Mark Adjustment and Interest Rate Adjustment Payments in funds-only settlement.
FICC excludes ACS Triparty Trades from a separate default management proposal (SR-FICC-2025-015), ensuring tailored risk handling. This alignment, as stated in the Notice of Filing, facilitates access for money market funds and cash providers reliant on triparty platforms for margin maintenance.
Alignment of Haircut Treatment and Novation Rules
A significant aspect of the rule change harmonizes the handling of initial haircuts in done-with Agent Clearing Transactions with those in Sponsored Member Trades. Previously, FICC's funds-only settlement could inadvertently return haircuts prematurely. The amendments base the Collateral Mark on the initial haircut rather than the contract price, ensuring the haircut remains with the intended party until final settlement. For example, a $2 haircut with a $1 securities value increase yields a $1 Collateral Mark, not $3.
ACS Triparty Trades may include optional initial haircuts, treated as off-the-market transactions where the posting party bears loss risks if FICC ceases to act. Definitions in Rule 1 are refined to apply haircuts specifically to done-with DVP repos, clarifying distinctions from done-away trades.
Additionally, the change clarifies that FICC does not novate start legs of same-day settling done-with Agent Clearing Transactions, aligning with Sponsored Service practices. Revisions to Rule 1 limit same-day settling trade definitions to non-ACS Triparty Trades meeting specific criteria, eliminating unnecessary notices under Rule 8.
Implications and Perspectives
This approval could enhance market efficiency by increasing centrally cleared triparty repos, reducing bilateral risks. Short-term implications include easier onboarding for indirect participants, potentially boosting volumes in FICC's systems. Long-term, it may contribute to broader central clearing adoption, aligning with SEC goals under Rule 17ad-22(e)(18)(iv)(C) to facilitate access to U.S. Treasury securities transactions.
From a regulatory perspective, the change supports investor protection by extending CCP guarantees without new margin methodologies. Market participants like clearing banks view it positively for operational simplicity, while some indirect entities highlight reduced barriers. However, challenges remain in ensuring Agent Clearing Members manage increased liabilities effectively.
The rule change also includes technical updates, such as new schedules for trade timeframes and conforming edits to Rules 3A and 5, enhancing rulebook clarity.
In summary, this development strengthens FICC's role in the Government securities market by broadening indirect access. Potential next steps involve monitoring adoption rates and addressing any operational hurdles. Ongoing debates may focus on balancing expanded access with risk controls, particularly amid evolving liquidity dynamics in repo markets.
