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CFTC proposes rules to simplify process for FCOs to obtain DCO registration exemption


The US Commodity Futures Trading Commission (CFTC) has voted unanimously to approve a proposal to codify policies and procedures for clearing organisations located outside of the US to obtain an exemption from registration as a derivatives clearing organisation (DCO).

The proposal will also reduce CFTC staff time and utilise fewer resources to grant exemptions.
 
The Commodity Exchange Act permits the CFTC to exempt a non-US clearing organisation from registration for the clearing of swaps if the CFTC determines that the clearing organisation is subject to comparable, comprehensive supervision and regulation by its home country authorities. The proposed rules would codify the Commission’s existing policies and procedures for granting such exemptions. To date, the CFTC has exempted four non-US clearing organisations from registration as a DCO: ASX Clear (Futures) Pty Limited; Japan Securities Clearing Corporation; Korea Exchange, Inc.; and OTC Clearing Hong Kong Limited.
 
This proposal is in keeping with the CFTC’s Project KISS, an agency-wide initiative to simplify agency rules, regulations and practices to make them less burdensome, less costly and transparent to all market participants. This transparency would allow non-US clearing organisations to navigate the exemption process with greater ease and reduce staff time and resources required to issue an exemption from registration. A more open and transparent process for obtaining an exemption from registration also promotes the CFTC’s goal of operating with cross-border comity and encourages greater harmonisation of the US and global financial markets.
 
CFTC is seeking public comments on this proposal. The comment period ends 60 days after the proposal’s publication in the Federal Register. Comments may be submitted electronically through the CFTC’s Comment Online process.

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