As Treasury Under Secretary Nellie Liang recently remarked, while “it has been an eventful year for the Treasury market and interest rate volatility has been high . This rule adoption will entail substantial costs such as initial margin requirements, clearing fees, and onboarding customers for indirect central clearing. While there will be some risk mitigation through central clearing, the prevention of a systemic crisis cannot be addressed through clearing agency regulations. Central clearing will not address broader effects that a rise in interest rates has on the value of fixed income instruments. These all point to the importance of the Treasury market and also raise concerns about the possibility of unintended consequences.

Source: Wall Street Journal December 14, 2023 10:23 UTC