The Securities and Exchange Commission has approved conditional exemptions that will allow the Chicago Mercantile Exchange to operate as a central counterparty for clearing credit defau
The Securities and Exchange Commission has approved conditional exemptions that will allow the Chicago Mercantile Exchange to operate as a central counterparty for clearing credit default swaps.
The conditional exemptions, based on a request by the CME and Citadel Investment Group, provide the SEC with regulatory oversight of the central counterparty, and should enhance the quality of the credit default swap market and the Commission’s ability to protect investors.
"The SEC is committed to increasing investor protection and reducing systemic risk by facilitating the development and oversight of central counterparties to clear credit default swaps," says SEC chairman Mary L. Schapiro (pictured). "Today’s actions will further enhance opportunities to manage the risk related to credit default swaps and improve the transparency and integrity of the market for these products."
On 24 December 2008, the SEC approved temporary exemptions allowing LCH.Clearnet to operate as a central counterparty for credit default swaps.
On 6 March 2009, the SEC approved similar temporary exemptions for ICE US Trust.
The Commission has worked in close consultation with the board of governors of the Federal Reserve System and the Commodity Futures Trading Commission, executing a memorandum of understanding in November 2008 to lay out a framework related to central counterparties for credit default swaps.
