> either they sell the treasures (with also instant settlement) and then buy, or they could trade on margin backed by the securities.

Treasuries don't instantly settle or clear. They clear next day. We could discuss changing that, but it's about nine hundred times more complicated than overhauling the entire stock market.

> or they could trade on margin backed by the securities

This shifts the entire market's credit risk to the banks. Which banks love. (Getting away from that is why we built clearinghouses.)