CFTC Issues Final Rules for Derivatives Clearing Organizations to Align with International Standards

The CFTC finalized rules to establish international standards for systemically important derivatives clearing organizations (SIDCOs).  According to the CFTC, the new rules, in conjunction with existing derivative clearing rules, establish regulations that are consistent with the Principles for Financial Market Infrastructures (PFMIs).  This will allow U.S. SIDCOs to continue to be Qualifying Central Counterparties for purposes of international bank capital standards.  The new rules include provisions concerning procedural requirements for opting in to the regulatory regime as well as substantive requirements relating to governance, financial resources, system safeguards, special default rules and procedures for uncovered losses or short falls, risk management, additional disclosure requirements, efficiency and recovery and wind-down procedures. 

Amended CFTC Rule 190.09 (“Member Property”) will take effect immediately.  CFTC Rule 39.31 (“Special Enforcement Authority”) and Rule 140.94 (“Delegation of Authority to the Director of the Division of Swap Dealer and Intermediary Oversight and the Director of the Division of Clearing and Risk”) will become effective on December 13, 2013.  The remaining rules will become effective on December 31, 2013.

CFTC Gary Gensler stated his support for the final rules. Additionally, he noted the opt-in mechanism in the final rules will permit other clearing houses (that are not SIDCOs) to elect to be held to these additional standards and “thus to benefit from the same capital treatment” (that is, they will be more attractive to banks subject to international capital standards).

See: Text of Final Rule; Final Rule Fact Sheet; Chairman Gensler’s Statement; Press Release.
Related News: CFTC Issues Final Rules Implementing Enhanced Risk Management for Systemically Important Derivatives Clearing Organizations (August 13, 2013).

 

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