CFTC Finalises Rule Expanding MMF Eligibility as Uncleared Swap Collateral

The Commodity Futures Trading Commission (CFTC) has finalised a rule change that broadens which money market funds (MMFs) qualify as initial margin for uncleared swaps. Previously, MMFs were eligible only if they restricted themselves to cash and government securities; those engaging in reverse repo, repo, or securities lending were excluded. That exclusion has now been lifted, opening collateral eligibility to a substantially larger portion of the US MMF universe.

The practical scope is considerable. Many government MMFs operating under SEC Rule 2a-7 routinely use reverse repo, and Office of Financial Research data cited in the final rule put US MMF participation in Treasury repo transactions at roughly $1.7 trillion as of October 2025. The CFTC judged reverse repo to be sufficiently low-risk given that, in a borrower default, the MMF retains the underlying government securities. Prime MMFs, which hold corporate and non-government assets, remain ineligible.

The Commission also declined to impose conditions that had been floated during the rulemaking, rejecting proposals to cap repo volumes, apply additional haircuts, or mandate central clearing of the funds’ repo transactions. On that last point, the CFTC noted that the SEC’s Treasury clearing compliance deadline for repo has already been pushed back to 30 June 2027. The clean, unconditional nature of the expansion gives market participants a clear operational baseline.

For tokenised collateral, the rule change carries direct relevance. MMFs have featured prominently in discussions around tokenised collateral for both uncleared and cleared margin, and this decision materially widens the set of MMFs that could serve that function in the uncleared space. Eligibility for cleared margin remains a separate question under different regulatory frameworks.