CFTC grants temporary no-action relief to derivatives clearing organisations
06 January 2021
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The US Commodity Futures Trading Commission’s (CFTC) Division of Clearing and Risk (DCR) has granted industry stakeholders’ request for temporary no-action relief for registered derivatives clearing organisations (DCOs) from the amended daily reporting requirements.
The commission unanimously approved a final rule amending certain regulations applicable to DCOs, including Regulation 39.19, which outlines daily reporting requirements, as of 18 December 2019.
The rule requires a DCO to submit daily reports to the CFTC on initial margin, variation margin, cash flow, and position information for each clearing member, by house origin and by each customer origin.
Clearinghouses were given until 27 January 2021 to comply with the amended regulations but a no-action relief is now in effect until 27 January 2022.
This action comes in response to the letter sent by several DCOs, including Options Clearing Corporation, the Chicago Mercantile Exchange, ICE Clear and its various global branches, along with the Futures Industry Association, in November 2020 to the CFTC requesting no-action relief from certain aspects of the amended daily reporting requirements.
The letter describes several operational and technological issues that DCOs and market
participants have identified undermining clearinghouses’ ability to comply with the amended requirements in the regulation that related to reporting of variation margin and cash flow information for futures and options positions by individual customer accounts.
The DCR acknowledged these concerns in a response letter sent on 31 December, where it acquiesced to the calls for forbearance, noting it needed more time to consider the issues raised.
Following this week’s vote the DCR will not recommend the commission take enforcement action against a DCO for failing to comply with the amended daily reporting requirements, so long as that DCO continues to comply with the daily reporting requirements as they were prior to the amendments.
The commission unanimously approved a final rule amending certain regulations applicable to DCOs, including Regulation 39.19, which outlines daily reporting requirements, as of 18 December 2019.
The rule requires a DCO to submit daily reports to the CFTC on initial margin, variation margin, cash flow, and position information for each clearing member, by house origin and by each customer origin.
Clearinghouses were given until 27 January 2021 to comply with the amended regulations but a no-action relief is now in effect until 27 January 2022.
This action comes in response to the letter sent by several DCOs, including Options Clearing Corporation, the Chicago Mercantile Exchange, ICE Clear and its various global branches, along with the Futures Industry Association, in November 2020 to the CFTC requesting no-action relief from certain aspects of the amended daily reporting requirements.
The letter describes several operational and technological issues that DCOs and market
participants have identified undermining clearinghouses’ ability to comply with the amended requirements in the regulation that related to reporting of variation margin and cash flow information for futures and options positions by individual customer accounts.
The DCR acknowledged these concerns in a response letter sent on 31 December, where it acquiesced to the calls for forbearance, noting it needed more time to consider the issues raised.
Following this week’s vote the DCR will not recommend the commission take enforcement action against a DCO for failing to comply with the amended daily reporting requirements, so long as that DCO continues to comply with the daily reporting requirements as they were prior to the amendments.
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