On March 29, the Division of Clearing and Risk (DCR) of the Commodity Futures Trading Commission issued guidance regarding the implementation of revised Regulation 39.13(g)(8)(ii). Regulation 39.13(g)(8)(ii) provides that a derivatives clearing organization (DCO) must require its clearing members to collect from their customers initial margin at a level that is at least equal to the DCO’s own initial margin requirements with respect to each product and portfolio and commensurate with the risk presented by each customer account. The regulation further requires that a DCO must set both (1) a baseline level of initial margin (“clearing initial margin”), which serves as the minimum amount its clearing members must in turn collect from their customers; and (2) an increased level of initial margin (“customer initial margin”) for categories of customers determined by a clearing member to have a “heightened risk profile.”
Continue Reading CFTC Staff Issues Guidance Regarding Risk Assessment of Customer Accounts for Futures Commission Merchants
derivatives clearing organizations
CFTC and Bank of England Sign Updated MOU for Supervision of Cross-Border Clearing Organizations
By Christian B. Hennion & Jack A. West on
On October 20, the Commodity Futures Trading Commission and the Bank of England (BoE) announced that they had signed an updated Memorandum of Understanding (MOU) regarding the cooperation and exchange of information to preserve the benefits of cross-border clearing activity. The MOU emphasizes the importance of supervision of central counterparties (CCPs) and clarifies that the…
CFTC Staff Provides Reporting Relief for Swaps Related to Certain Upcoming DCO Auctions
By Kevin M. Foley & Elizabeth Organ on
Posted in CFTC, Derivatives
On October 13, the Division of Market Oversight (DMO) of the Commodity Futures Trading Commission issued two no-action letters that provide limited relief from swap transaction and pricing data reporting requirements for specific derivatives clearing organizations (DCOs) and market participants that take part in upcoming DCO auctions intended to assist in transitioning certain cleared swaps…
European Commission Publishes Consultation on Delegated Acts under EMIR
Posted in EU Developments, Financial Markets
On June 11, the European Commission (the Commission) published two consultations in relation to the proposed delegated acts (Delegated Acts) on tiering and comparable compliance (the Tiering Consultation and the Comparable Compliance Consultation, together the Consultations) for third-country central counterparties (TC CCPs) as part of its review of the European Market Infrastructure Regulation (EMIR).
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CFTC Proposes Amendments to Reduce Regulatory Obligations on Certain Non-US Clearing Organizations
By Kevin M. Foley on
Posted in CFTC, Derivatives
The Commodity Futures Trading Commission has published for comment two proposals intended to reduce the regulatory obligations that certain non-US clearing organizations would otherwise be subject. In accordance with section 5b(a) of the Commodity Exchange Act (CEA), it is unlawful for any clearing organization to clear swaps on behalf of US persons unless that clearing organization is registered with the CFTC as a derivatives clearing organization (DCO). However, CEA section 5b(h) authorizes the CFTC to exempt from registration any non-US clearing organization that is “subject to comparable, comprehensive supervision and regulation” by its home country regulator. In the exercise of this latter authority, the CFTC has proposed to permit those non-US clearing organizations that the CFTC determines do not pose a substantial risk to the US financial system to elect either 1) registration as a DCO with alternative compliance obligations; or 2) an exemption from registration altogether.
Continue Reading CFTC Proposes Amendments to Reduce Regulatory Obligations on Certain Non-US Clearing Organizations
CFTC to Hold an Open Commission Meeting on April 23
The Commodity Futures Trading Commission will host an open meeting at 10:00 a.m. on Tuesday, April 23, at which it expects to cover the following topics:
- notice of proposed rulemaking regarding amendments to regulations on certain swap data depository and swap data reporting requirements;
- notice of proposed rulemaking regarding amendments to derivatives clearing organization general
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CFTC Approves a Final Rule to Amend Uncleared Swap Margin Requirements
By Kevin M. Foley & Laura N. Krcmaric on
Posted in CFTC, Derivatives
On November 19, the Commodity Futures Trading Commission approved a final rule to amend its margin requirements for uncleared swaps for swap dealers and major swap participants for which there is no prudential regulator (CFTC Margin Rule). As a part of the Project KISS initiative, the amendments were designed to harmonize the CFTC Margin Rule with related rules that certain prudential regulators have adopted (QFC Rules).
Continue Reading CFTC Approves a Final Rule to Amend Uncleared Swap Margin Requirements
CFTC’s Division of Clearing and Risk Extends No-Action Relief for Shanghai Clearing House
By Dina Wegh & Kevin M. Foley on
Posted in CFTC, Derivatives
On May 16, the Commodity Futures Trading Commission’s Division of Clearing and Risk (DCR) issued No-Action Letter 17-26, which extends relief previously granted to the Shanghai Clearing House under CFTC No-Action Letter 16-56. CFTC No-Action Letter 16-56 is effective until (and excluding) May 31.
Continue Reading CFTC’s Division of Clearing and Risk Extends No-Action Relief for Shanghai Clearing House
CFTC Grants CME Clearing Europe Registration as a Derivatives Clearing Organization
Posted in CFTC, Derivatives
On November 29, the Commodity Futures Trading Commission approved the CME Clearing Europe (CMECE) registration as a derivatives clearing organization (DCO) under the Commodity Exchange Act. As a registered DCO, CMECE may provide clearing services with respect to 1) swaps, subject to certain requirements; and 2) futures and options on futures contracts traded on or …
CFTC To Host Roundtable on Recent CPMI-IOSCO Guidance
By Kevin M. Foley & Sarah R. Adams on
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…