August 8, 2018

CFTC Proposes Rules to Simplify Process for Foreign Clearing Organizations to Obtain DCO Registration Exemption

Washington, DC — The Commodity Futures Trading Commission (CFTC) today voted unanimously to approve a proposal to codify policies and procedures for clearing organizations located outside of the U.S. to obtain an exemption from registration as a derivatives clearing organization (DCO). The proposal will also reduce CFTC staff time and utilize fewer resources to grant exemptions.

The Commodity Exchange Act permits the CFTC to exempt a non-U.S. clearing organization from registration for the clearing of swaps if the CFTC determines that the clearing organization is subject to comparable, comprehensive supervision and regulation by its home country authorities. The proposed rules would codify the Commission’s existing policies and procedures for granting such exemptions. To date, the CFTC has exempted four non-U.S. clearing organizations from registration as a DCO: ASX Clear (Futures) Pty Limited; Japan Securities Clearing Corporation; Korea Exchange, Inc.; and OTC Clearing Hong Kong Limited.  

This proposal is in keeping with the CFTC’s Project KISS, an agency-wide initiative to simplify agency rules, regulations and practices to make them less burdensome, less costly and transparent to all market participants. This transparency would allow non-U.S. clearing organizations to navigate the exemption process with greater ease and reduce staff time and resources required to issue an exemption from registration. A more open and transparent process for obtaining an exemption from registration also promotes the CFTC’s goal of operating with cross-border comity and encourages greater harmonization of the U.S. and global financial markets.

CFTC is seeking public comments on this proposal. The comment period ends 60 days after the proposal’s publication in the Federal Register. Comments may be submitted electronically through the CFTC’s Comment Online process.