CFTC RULES FOR ALIGNMENT OF DERIVATIVES CLEARING ORGANIZATIONS WITH INTERNATIONAL STANDARDS

FROM:  COMMODITY FUTURES TRADING COMMISSION 

CFTC Issues Proposed Rules for Derivatives Clearing Organizations to align with International Standards

Washington, DC — The Commodity Futures Trading Commission (CFTC) proposed rules to establish additional standards for systemically important derivatives clearing organizations (SIDCOs) that are consistent with the Principles for Financial Market Infrastructures (PFMIs) and address all of the remaining gaps between part 39 of the Commission’s regulations and the PFMIs.

These rules, together with the existing derivatives clearing organizations rules, would establish standards that are consistent with the PFMIs and would allow SIDCOs to continue to be Qualifying Central Counterparties (QCCPs) for purposes of international bank capital standards. The proposed rules include substantive requirements relating to governance, financial resources, system safeguards, special default rules and procedures for uncovered losses or shortfalls, risk management, additional disclosure requirements, efficiency, and recovery and wind-down procedures.

In addition, because of the potential advantages afforded to QCCPs (namely, lower capital charges for banks clearing through a QCCP), the proposed rules include procedures by which derivatives clearing organizations other than SIDCOs may elect to become subject to these additional standards.