The US Commodity Futures Trading Commission (CFTC) has issued an order granting Eurex Clearing AG (Eurex Clearing) registration as a derivatives clearing organisation (DCO) under the Commodity Exchange Act (CEA).
Under the order, Eurex Clearing will be authorised to provide clearing services for swaps for US clearing members as well as their customers under Section 5b of the CEA. The registration will become effective after Eurex Clearing meets CFTC’s “straight-through processing” requirements. Eurex Clearing requested that CFTC issue a conditional registration, as it preferred to comply with those requirements in the future, at the same time as it complies with the expected European requirements for straight-through processing. Those requirements have not been issued due to the delay in the implementation of the European Commission’s Markets in Financial Instruments Directive II (MiFID II).
In light of the delayed effectiveness of registration, CFTC today extended previously provided relief to permit Eurex Clearing to continue to clear proprietary positions in interest rate swaps for U.S. clearing members. CFTC’s Division of Clearing and Risk (Division) has provided Eurex Clearing this relief since July 2013. After Eurex Clearing complies with the straight-through processing requirement and its order of registration becomes effective, Eurex Clearing may begin clearing FCM customer positions, as well as continue clearing proprietary positions for US clearing members.
The Division has also provided no-action relief that permits Eurex Clearing to use a modified version of the acknowledgment letter required under CFTC Regulations 1.20(g)(4) and 22.5 for customer accounts maintained at the Deutsche Bundesbank, the central bank of Germany.
Last week, the CFTC signed a memorandum of understanding with Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and Deutsche Bundesbank, the domestic regulators of Eurex Clearing, to facilitate information sharing and cooperative oversight.
Eurex Clearing becomes the 16th DCO registered with the CFTC and the 6th registered DCO based outside the United States.
