Trader at screen

Mandatory clearing of iTraxx CDS indices for Category 2 entities has begun, says CFTC

The second phase of required clearing for certain iTraxx credit default swap (CDS) indices for Category 2 entities has begun, according to a statement issued by the division of clearing and risk of the Commodity Futures Trading Commission.  

 
Category 2 entities include commodity pools, private funds, and persons predominantly engaged in activities that are in the business of banking, or in activities that are financial in nature, except for third-party subaccounts. 
 
These entities are required to begin clearing iTraxx CDS indices that are subject to the clearing requirement under section 2(h) of the Commodity Exchange Act (CEA) and Regulations 50.2 and 50.4(b) executed on or after 25 July, 2013.
 
The Dodd-Frank Wall Street Reform and Consumer Protection Act amended the CEA to require that the Commission determine whether a swap is required to be cleared by a derivatives clearing organisation (DCO).  The Commission adopted its first clearing requirement determination for four classes of interest rate swaps and two classes of CDS on 28 November 2012.
 
At the time of the Commission’s initial clearing determination no DCO was offering client clearing for the iTraxx CDS indices. The Commission specified that if no DCO offered client clearing for the indices by 11 February 2013, compliance with the required clearing of iTraxx would begin 60 days after the date on which iTraxx was first offered for client clearing by an eligible DCO.
 
On 25 February, ICE Clear Credit notified the Commission that it had begun offering customer clearing of the iTraxx CDS indices that are subject to the clearing requirement. 
 
The following are the compliance dates previously announced for required clearing of these iTraxx swaps:
 
·         Category 1 entities: 26 April 2013
·         Category 2 entities: 25 July 2013
·         All other entities: 23 October 2013
 
The compliance dates set forth above do not apply to the clearing schedule for the interest rate swaps and other CDS indices subject to the clearing requirement established in the Commission’s first determination, which are as follows:
 
·         Category 1 entities: 11 March 2013
·         Category 2 entities: 10 June 2013
·         All other entities: 9 September 2013

Further reading

View all


Upcoming events

3 days 6 hours from now - Kuala Lumpur
3 days 6 hours from now - California
4 days 6 hours from now - Las Vagas

Upcoming training

Mon, 10/11/2014 (All day) - London
Mon, 10/11/2014 (All day) - London
Thu, 13/11/2014 (All day) - London