On December 3, the Commodity Futures Trading Commission’s (CFTC) Division of Clearing and Risk (DCR) and Division of Market Oversight (DMO, and collectively, the Divisions) issued CFTC Letter No. 20-43, an interpretation regarding Sections 2(h)(1) and 2(h)(8) of the Commodity Exchange Act (CEA) and the CFTC regulations thereunder.
Continue Reading CFTC Interprets and Issues No-action Relief from Certain Clearing and Trade Execution Requirements
LCH
CFTC Conducts DCO Liquidity Stress Tests
By James M. Brady & Kevin M. Foley on
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, the funds necessary to meet the settlement obligations resulting from the simultaneous default of two large clearing members. DCR also evaluated whether the need for liquidity at multiple DCOs under such circumstances might have systemic implications.
Continue Reading CFTC Conducts DCO Liquidity Stress Tests