SEC Treasury clearing deadlines reach stablecoin issuers through their repo dealers

Netting is where any saving starts. In CryptoSlate's simplified case, a dealer that owes $100 and is due $95 on the same settlement date pays just $5 in cash when both obligations qualify at the same clearinghouse ^[11]. The cash that has to move falls by 95% ^[1]. Real Treasury trades also involve securities deliveries, and the legal agreements decide which obligations can be combined ^[12], so 95% is a clean-case figure.

The cost comes through collateral. A clearinghouse becomes the buyer to every seller and the seller to every buyer ^[1], and it can promise to complete trades because it collects financial resources from its members ^[14]. That protection takes a lot of money, so the new system will also change what firms pay to trade and borrow, CryptoSlate reported ^[16]. The source does not put a figure on margin or access fees. Whether a customer ends up borrowing more cheaply depends on how much its dealer saves and how much of that it passes on after clearing costs ^[13].

For an issuer that leaves three plausible outcomes. In one, dealers pass most of the saving to every repo client, and issuers of all sizes borrow against reserves for less. In another, dealers pass the clearing costs through and keep the saving, so issuers pay more for each dollar raised. Or, the version I find likelier, dealers spend the freed capacity on the clients they already serve most. The New York Fed's account of the market follows cash from money-market funds through dealers to borrowers such as hedge funds ^[8]. An issuer raising cash against its Treasuries competes with those borrowers for the same dealer capacity.

I think the cost splits by size. Netting pays off when flows offset. An issuer whose trades with a dealer run in both directions gives it something to net; a small issuer selling mostly one way into redemptions brings the collateral bill with less to offset. The case against that view is competition: if enough dealers free enough balance sheet, they have to court smaller clients to use it, and those clients' rates fall.

Switching from repo to outright sales does not avoid any of this. Eligible cash purchases and sales of Treasuries face the Dec. 31 deadline, before repos do ^[4]. Selling also gives up the route back to the securities that a repo keeps, since a repo is a sale with an agreement to buy back, often the next day, at a slightly higher price ^[7].

The size thesis can be tested once repos clear after June 30, 2027 ^[4]. If repo rates offered to smaller issuers move closer to SOFR, the benchmark for overnight borrowing against Treasuries ^[15], the size split is wrong and the competition case is right.