MFA Advocates for Flexible Margin Standards in Treasury Repo Markets

The Managed Funds Association (MFA) has called on the Treasury market Practices Group (TMPG), backed by the Federal Reserve Bank of New York, to uphold flexible, risk-based margin standards in its proposed updates to best practices for non-centrally cleared bilateral repos (NCCBRs). The recommendation was outlined in a comment letter submitted today.

"MFA supports efforts to enhance the resilience of Treasury markets—the bedrock of the global financial system," said Jennifer Han, MFA Chief Legal Officer. "Preserving flexible, risk-based margining is critical. Imposing rigid standards could destabilize repo markets, erode liquidity, and amplify systemic risks."

The association emphasized that TMPG’s guidelines should enable firms to manage exposures proportionately without compromising market efficiency. The debate underscores the delicate balance between risk mitigation and market functionality in the $1.7 trillion Treasury repo ecosystem.