GMAC votes to recommend that CFTC clarify U.S. Treasury ETFs are eligible as initial margin under UMR

The CFTC's Global Markets Advisory Committee voted to adopt a Market Structure Subcommittee recommendation asking the commission to clarify that U.S. Treasury exchange‑traded funds may be treated as eligible collateral for initial margin under the uncleared margin rules (UMR).

"Clarifying that fixed income ETFs are in fact eligible collateral would be highly consistent with both the IOSCO principles and the CFTC's own goals," Michael Winnicki, presenter and subcommittee member, told the committee. Winnicki said Treasury ETFs provide multiple layers of liquidity — exchange trading plus in‑kind redemption to underlying Treasury markets — and can diversify counterparty exposure.

Members discussed how haircuts should be applied, with the working group and subcommittee endorsing a look‑through approach that applies haircuts based on the ETF's underlying holdings. Winnicki said that the recommendation does not seek a single mandatory haircut and that counterparties would remain free to restrict collateral schedules or require different haircuts.

GMAC moved, seconded and voice‑voted the recommendation. The designated Federal Officer reported the vote as 26 yes, 0 no and 1 abstention; the motion carried and will be submitted to the Commission for consideration.

The subcommittee also acknowledged operational and infrastructure steps needed to enable broad industry receipt and custody of ETFs as margin — including third‑party custodial arrangements — and asked the CFTC to help coordinate with other U.S. prudential regulators.