Corporate & Financial Weekly Digest

Corporate & Financial Weekly Digest

Tag Archives: DCO

CFTC Clarifies That Variation Margin Constitutes Settlement

Posted in CFTC, Derivatives
The Division of Clearing and Risk (DCR) of the Commodity Futures Trading Commission has issued an interpretive letter clarifying that payments of variation margin, price alignment amounts and other payments in satisfaction of outstanding exposures on a counterparty’s cleared swap positions constitute “settlement” under the Commodity Exchange Act (CEA) and CFTC Regulation 39.14. The CEA… Continue Reading

CFTC Conducts DCO Liquidity Stress Tests

Posted in CFTC, Derivatives
The Division of Clearing and Risk (DCR) of the Commodity Futures Trading Commission has issued a report summarizing stress tests conducted by three derivatives clearing organizations (DCOs): the Chicago Mercantile Exchange (CME), ICE Clear US (ICUS) and LCH Ltd (LCH). During the stress tests, DCR evaluated whether each DCO could obtain, in a timely manner,… Continue Reading

CFTC Grants DCO Registration to LedgerX

Posted in CFTC, Derivatives
The Commodity Futures Trading Commission has issued an order granting LedgerX LLC registration as a derivatives clearing organization (DCO). As specified in the order, LedgerX is permitted to clear fully collateralized digital currency swaps. A transaction will be fully collateralized if LedgerX holds, at all times, funds in the form of the required payment sufficient… Continue Reading

CFTC Staff Grants No-Action Relief From Residual Interest Withdrawal Restrictions

Posted in CFTC, Derivatives
On January 26, the Commodity Futures Trading Commission’s Division of Swap Dealer and Intermediary Oversight (Division) issued CFTC Letter No. 17-03, in which the Division authorized futures commission merchants (FCMs) that carry cleared swaps customer accounts to withdraw excess residual interest from the cleared swaps customer accounts prior to the time provided in CFTC Rule… Continue Reading

CFTC Grants Order to LCH

Posted in CFTC, Derivatives
On January 13, the Commodity Futures Trading Commission issued an order authorizing LCH.Clearnet Limited (LCH), a CFTC-registered derivatives clearing organization (DCO), and its clearing members that are registered futures commission merchants to: (1) commingle in a cleared swaps customer account customer money, securities and property used to margin, secure or guarantee both futures and foreign… Continue Reading

CFTC Staff Issues Time-Limited No-Action Relief for Entities Submitting Swaps for Clearing With Derivatives Clearing Organizations Acting Under Exemptive Orders or No-Action Relief

Posted in CFTC, Derivatives, Dodd-Frank Developments
On December 19, 2016, the Division of Market Oversight of the Commodity Futures Trading Commission announced time-limited no-action relief for entities submitting swaps for clearing by derivatives clearing organizations (DCOs) relying on a CFTC exemption order or no-action relief (Relief DCOs). Entities submitting such swaps for clearing are now relieved of the obligation to terminate… Continue Reading

CFTC To Host Roundtable on Recent CPMI-IOSCO Guidance

Posted in CFTC
The Commodity Futures Trading Commission will host a roundtable on October 6 to gather feedback in relation to a report on central counterparty resilience and recovery recently published by the Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO). Roundtable panelists will include US derivatives clearing organizations (DCOs), their… Continue Reading

CFTC Approves Rules Amending Cleared Swaps Data Reporting and Recordkeeping Requirements

Posted in CFTC, Derivatives
On June 14, 2016, the Commodity Futures Trading Commission announced the approval of amendments to Part 45 of the CFTC’s regulations, which pertain to the reporting and recordkeeping obligations involved in cleared swaps transactions. The amendments seek to clarify certain aspects of the existing Part 45 rules, including the roles of registered entities and swap… Continue Reading

CFTC Approves Derivative Clearing Organization Registration Order for Eurex Clearing AG

Posted in CFTC, Derivatives
On February 1, the Commodity Futures Trading Commission issued an order granting Eurex Clearing AG registration as a derivatives clearing organization (DCO) under the Commodity Exchange Act (CEA). The order will allow Eurex Clearing to provide clearing services, in its capacity as a registered DCO, for swaps for (1) US persons clearing for their own… Continue Reading

CFTC Proposes Cybersecurity Testing for DCOs, DCMs, SEFs and SDRs

Posted in CFTC, Derivatives, Dodd-Frank Developments
The Commodity Futures Trading Commission has proposed rules that would require all derivatives clearing organizations (DCOs), swap data repositories (SDRs), designated contract markets (DCMs) and swap execution facilities (SEFs) to conduct cybersecurity testing with respect to: (1) vulnerability testing; (2) internal and external penetration testing; (3) controls testing; (4) security incident response plan testing; and… Continue Reading

CFTC Exempts a Japanese Clearing Organization and Korean Exchange From Derivatives Clearing Organization Registration

Posted in CFTC, Derivatives, Dodd-Frank Developments
The Commodity Futures Trading Commission has issued separate orders of exemption allowing the Japan Securities Clearing Corporation (JSCC) and Korea Exchange, Inc. (KRX) to clear interest rate swaps without registering as derivatives clearing organizations (DCO). The CFTC granted these exemptions after determining that both entities are subject to a comprehensive supervisory and regulatory framework in… Continue Reading

CFTC Issues Guidance on “Firm or Forced Trades” Process

Posted in CFTC, Derivatives
The Commodity Futures Trading Commission’s Division of Clearing and Risk and Division of Market Oversight have issued guidance to derivatives clearing organizations (DCOs) that use a “firm or forced trades” process to determine the price of swaps for which public market prices are not available. Specifically, the guidance confirms that a DCO is not required… Continue Reading

CFTC Issues Guidance on CFTC Requirements for DCOs and the Principles for Financial Market Infrastructures

Posted in CFTC, Derivatives
The Commodity Futures Trading Commission’s Division of Clearing and Risk (DCR) has issued an interpretation on the consistency between Part 39 of CFTC Regulations and the Principles for Financial Market Infrastructures. The CFTC previously has adopted additional regulatory requirements for systemically important derivatives clearing organizations (SIDCOs) and other derivatives clearing organizations (DCOs) that opt in… Continue Reading

CFTC Seeks Comment on Japan Securities Clearing Corporation’s Petition for Exemption from DCO Registration

Posted in CFTC, Derivatives, Dodd-Frank Developments
The Commodity Futures Trading Commission is seeking public comment on a petition by the Japan Securities Clearing Corporation (JSCC) for an order of exemption from registration as a derivatives clearing organization (DCO). Pursuant to temporary no-action relief, JSCC currently allows US clearing members to clear certain swaps, provided that certain conditions are met. In particular,… Continue Reading

CFTC Proposes Cleared Swap Reporting Amendments

Posted in CFTC, Derivatives, Dodd-Frank Developments
The Commodity Futures Trading Commission has proposed to amend Part 45 of its regulations insofar as they relate to the reporting to a swaps data repository of swaps that are cleared by a derivatives clearing organization (DCO). The proposed amendment is designed to better accommodate the multi-swap framework of such cleared swaps. Specifically, the CFTC… Continue Reading