Sunday, July 14, 2019

New Proposed Rules in the Clearing Area

On Thursday, the Commodity Futures Trading Commission (CFTC) held an open meeting to consider:

Supplemental Proposal on Exemption from Derivatives Clearing Organization Registration

Proposed Rule on Registration with Alternative Compliance for Non-U.S. Derivatives Clearing Organizations

Proposed Rule on Customer Margin Rules relating to Security Futures

In Special Report: CFTC advances two proposals amending oversight of non-U.S. clearinghouses, the FIA noted:

…the five members of the U.S. Commodity Futures Trading Commission voted unanimously to release a proposed rulemaking designed to create a less burdensome regulatory regime for foreign clearinghouses that clear swaps for U.S. customers…

A related proposal fared less well, however.  The agency's two Democratic commissioners strongly objected to a supplemental proposal to exempt foreign clearinghouses from U.S. regulation if they are subject to regulation in their home countries that is comparable to the U.S….Despite the objections, the supplemental proposal passed by a vote of three to two and will be published for public comment. 

As I’ve noted, the regulation of derivatives clearing has been a source of conflict between international policymakers, particularly since the financial crises of 2007-08 and the subsequent global clearing mandates.  An article in the FT, CFTC agrees to rein in rules for overseas clearing houses, suggests that one aim of the CFTC’s decisions on Thursday is to decrease tensions in this area between the U.S. and the E.U.  For now, I’m cautiously optimistic.

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