Statement of Chairman Timothy Massad on Expanded Interest Rate Swap Clearing Requirement Determination and Final Rulemaking

September 28, 2016

Central clearing is one of the great innovations of the financial system. Indeed, increasing the use of central clearing for over-the-counter swaps is one of the most important goals of the 2009 G20 Leaders’ agreement and the Dodd-Frank Act.

Of course, central clearing does not eliminate the risk of transactions. But clearinghouses can monitor and mitigate that risk, which can make our financial system more stable.

In just a few short years, the percentage of over-the-counter swaps being cleared has increased substantially. And today, I am very pleased that we are continuing this progress by expanding the Commission’s swap clearing requirement to include interest rate swaps denominated in nine additional currencies. Our counterparts in the relevant non-U.S. jurisdictions have mandated, or are expected soon to mandate, central clearing for these products, and our requirements will be phased based on when the corresponding clearing requirements have taken effect in non-U.S. jurisdictions.

The Commission’s first clearing requirement, adopted in 2012, applied to interest rate swaps denominated in four currencies—U.S. dollar, euro, British sterling, and Japanese yen. Today, we have expanded the interest rate swap clearing requirement to include those denominated in the Australian dollar, Canadian dollar, Hong Kong dollar, Singapore dollar, Mexican peso, Norwegian krone, Polish zloty, Swedish krona, and Swiss franc.

Requiring clearing for these swaps will further reduce risk within our financial system. Today’s determination also represents another important step toward cross-border harmonization of swaps regulations, which is critically important to creating an effective regulatory framework.

This rule reflects the CFTC’s close coordination with our fellow regulatory authorities from the various jurisdictions with whom we are seeking to harmonize. We also consulted and coordinated with our fellow financial regulators here in the United States.

I want to thank the hardworking CFTC staff for their efforts on this important measure. I’d also like to thank my fellow Commissioners Bowen and Giancarlo for their support.

Last Updated: September 28, 2016