CME-FICC Netting Terms Clash with Hedge Funds – Risk.net

Hedge funds are expressing concern over proposed changes to cross-margin arrangements between CME and the Fixed Income Clearing Corporation (FICC), potentially disrupting the transition to central clearing for buy-side firms. The dispute centers on the power of the clearinghouses to suspend the arrangement, a move some funds view as increasing risk, whereas clearing members maintain We see standard practice.

The FICC filed an application with the U.S. Securities and Exchange Commission (SEC) on December 15, 2025, to expand its cross-margin agreement with CME to include customers of clearing members. The Commodity Futures Trading Commission (CFTC) had already approved a related proposal on December 12, 2025, signaling a likely approval from the SEC, according to reporting from Risk.net.

Cross-margining, which allows for more efficient risk management by netting margin requirements across different clearinghouses, is considered “crucial” for buy-side firms transitioning to central clearing, according to Daniel Austin, head of a yet-unnamed institution. The ability of CME and FICC to suspend this arrangement, however, is causing unease among some hedge funds.

The concerns revolve around the potential for increased margin calls and liquidity pressures if the cross-margin agreement is halted. While clearing members argue that the suspension power is a standard provision allowing for operational or risk management needs, hedge funds fear it could be used in a way that disadvantages them. The specific details of the conditions under which the arrangement could be suspended remain a point of contention.

The expansion of the cross-margin program comes as CME seeks to gain market share in the clearing of Treasury securities, traditionally dominated by FICC. Competition between the two clearinghouses is expected to intensify as CME attempts to attract clients with its new capabilities. The outcome of this competition could significantly impact the landscape of fixed income clearing in the U.S.

As of March 20, 2026, the SEC has not publicly announced its decision on the FICC’s application, leaving the future of the expanded cross-margin agreement uncertain. The disagreement highlights the ongoing tension between the desire for greater efficiency in clearing and the need to maintain robust risk management practices.