A derivatives clearing organization (DCO) is a clearinghouse, clearing association, clearing corporation, or similar entity that enables each party to an agreement, contract, or transaction to substitute, through novation or otherwise, the credit of the DCO for the credit of the parties; arranges or provides, on a multilateral basis, for the settlement or netting of obligations; or otherwise provides clearing services or arrangements that mutualize or transfer credit risk among participants.
Any clearinghouse that seeks to provide clearing services with respect to futures contracts, options on futures contracts, or swaps must register with the CFTC as a DCO before it can begin providing such services. To obtain and maintain registration, a DCO must comply with the DCO core principles established in Section 5b, 7 USC § 7a-1, of the Commodity Exchange Act (CEA):
How to Register as a Derivatives Clearing Organization
Criteria, procedures, and requirements for registration as a DCO are set forth in Section 5b of the CEA, 7 USC § 7a-1, and Part 39 of the CFTC’s regulations. Applicants should review the Commission's final rules dated November 8, 2011 (76 FR 69334), which set forth changes to DCO registration procedures, including additional information regarding how an applicant may demonstrate compliance with each of the core principles as amended by the Dodd-Frank Act.
DCO Margin Timeline
The DCO Margin Timeline is a graphic representation of the listed DCO settlement cycles with respect to the timing of issuance of calls for margin and when receipt is required. The Timelines contain footnotes specific to each DCO's information.