CME awaits SEC approval for CDS clearing

On December 23 the Commodity Futures Trading Commission (CFTC) announced the CME's certified plans to provide clearing services for CDS contracts complied with the core principles governing derivatives clearing organisations and CFTC rules, and therefore the regulator "would not object to the certification".

The CME similarly confirmed that, on December 23, it had successfully completed the review process with the CFTC and the Federal Reserve Bank of New York. "Extensive discussions" with the Securities and Exchange Commission (SEC) were continuing, but discussions were "well along in the SEC review process", the CME said.

Under current regulation, when traded bilaterally CDSs are excluded from commodities and securities legislation under several swaps exemptions. When the products are centrally cleared, however, the SEC's present position is that CDS contracts become subject to securities law. The CME is negotiating to be exempted from supervision under the Securities Act, but as of January 5 little headway had apparently been made.

"We do have the necessary clearance from the Fed and CFTC, but at this point we don't have an update regarding the SEC exemption and are still waiting to hear from them. We don't have a launch date for clearing currently but our focus now is customer readiness and we're in talks with many from both the buy and sell side," explained Anita Liskey, managing director of corporate marketing and communications at the CME Group.

While the CME has received approval from the CFTC, no detail has yet emerged on when the New York Fed will give the green light to the clearing platform under development by the consortium of the Atlanta-based Intercontinental Exchange and the Delaware-headquartered Clearing Corporation. The only central counterparty platform to go live so far has been London-based Liffe's clearing system, which went live on December 22.

See also: NY approval brings Ice CDS clearing platform a step closer
Credit default swap clearing house to miss deadline
Dinallo backtracks on regulating CDSs

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact or view our subscription options here:

You are currently unable to copy this content. Please contact to find out more.

Switching CCP – How and why?

As uncertainty surrounding Brexit continues and the impacts of Covid-19-driven market volatility are analysed, it is essential for banks and their end-users to understand their clearing options, and how they can achieve greater capital and cross…

You need to sign in to use this feature. If you don’t have a account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here