Statement of Chairman Timothy Massad on CFTC’s Decision to Grant Eurex Clearing AG Registration as a Derivatives Clearing Organization
February 1, 2016
Today we are approving the registration of Eurex Clearing. I am very pleased that Eurex has chosen to register with the CFTC, and that the Commission has unanimously approved this application.
Eurex Clearing is one of the leading clearinghouses in Europe and across the world. Its registration will further enhance the global trading and clearing of derivatives. That helps the many businesses around the world that rely on these markets for price discovery and to hedge commercial risk.
With this approval, Eurex becomes the 6th clearinghouse located outside the U.S. that is registered with the CFTC. Our system of dual registration came about originally because the CFTC traditionally took a very non-territorial view as to where clearing must occur. The U.S. did not mandate that clearing of futures traded on U.S. exchanges must take place in the U.S., nor did we restrict the ability of U.S. based customers to clear futures traded abroad. We simply required that clearing of futures traded on U.S. exchanges take place through clearinghouses that are registered and meet certain standards. These standards are designed to ensure customer protection, financial stability, and include provisions related to our bankruptcy laws.
This dual registration framework has been in place for many years, and is part of the foundation on which the derivatives market—and in particular the swaps market—has become global.
In addition, we have also granted exemptions or relief from registration to several non-U.S. clearinghouses that wish to clear swaps for their U.S. clearing members only, and not for U.S. customers. We issued this relief to Eurex in 2013. We have also recently issued similar exemptive orders for clearinghouses located in Australia, Japan, South Korea and Hong Kong. In these cases, the clearinghouse need not comply with many CFTC regulations as long as it has comparable and comprehensive supervision and regulations and complies with the international standards set forth in the Principles for Financial Market Infrastructures, or PFMIs.
Once a non-U.S. clearinghouse is registered with us, we work closely with its foreign authority to exchange information and cooperate in supervision and oversight. In this regard, I am also pleased that last week we signed a memorandum of agreement with German authorities, Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and Deutsche Bundesbank (Bundesbank) that will facilitate this cooperation. We look forward to working with them.
The Commission also took certain steps to accommodate Eurex Clearing’s request to register at this time.
For example, our approval is subject to a condition pertaining to Eurex’s plan to comply with the CFTC’s requirements for “straight-through processing.” Eurex requested that we issue a conditional approval so that it could comply with these requirements in the future, as it wishes to do so concurrently with the re-engineering of its systems to comply with European straight-through processing requirements, once they are finalized. Those European requirements have not been issued due to the delay in the implementation of the European Commission’s (EC) Markets in Financial Instruments Directive II (MiFID II) until January 2018.
We agreed to this request. And in connection with it, the staff also agreed to issue no-action relief that will permit Eurex to continue to clear proprietary positions in interest rate swaps for U.S. clearing members, as it has since 2013, in the meantime.
Today’s action is an important step toward harmonizing global requirements for central clearing counterparties (CCPs), enhancing cooperative oversight and facilitating the global market for derivatives.
Last Updated: February 1, 2016