On November 18, the Commodity Futures Trading Commission unanimously approved a final rule (Final Rule) establishing a framework for the CFTC to grant a clearing organization organized outside of the US an exemption from registration as a derivatives clearing organization (DCO) to permit the clearing organization to clear swaps transactions on behalf of certain US persons. Subject to the terms and conditions set out in the Final Rule, the CFTC may grant an exemption from registration if: (1) the CFTC determines that the clearing organization is subject to comparable, comprehensive supervision and regulation by its home country authorities; and (2) the clearing organization agrees that its clearing services on behalf of US persons will be limited to:
- a US person that is a clearing member of the exempt DCO that clears swaps only for itself and those persons that fall within the definition of “proprietary account” set forth in CFTC Regulation 1.3;
- a non-US person that is a clearing member of the exempt DCO that clears swaps for any affiliated US person that falls within the definition of “proprietary account”; and
- a futures commission merchant that is a clearing member of the exempt DCO, or otherwise maintains an account with an affiliated broker that is a clearing member, for the purpose of clearing only proprietary swaps positions for itself and those persons that fall within the definition of “proprietary account.”
The Final Rule codifies existing CFTC policies and procedures for granting such exemptions and establishes procedures the CFTC can use to modify or terminate an exemption. To date, the CFTC has exempted four non-US clearing organizations from registration.
The Final Rule will be effective 30 days after publication in the Federal Register.
The Final Rule is available here.