July 25, 2013

CFTC Announces that Mandatory Clearing of iTraxx CDS Indices for Category 2 Entities Begins Today

Washington, DC — The Division of Clearing and Risk (Division) of the Commodity Futures Trading Commission (Commission) announces that the second phase of required clearing for certain iTraxx credit default swap (CDS) indices begins today for Category 2 Entities. 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 July 25, 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 organization (DCO). The Commission adopted its first clearing requirement determination for four classes of interest rate swaps and two classes of CDS on November 28, 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 February 11, 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 February 25, 2013, ICE Clear Credit LLC 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: Friday, April 26, 2013
  • Category 2 Entities: Thursday, July 25, 2013
  • All other entities: Wednesday, October 23, 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: Monday, March 11, 2013
  • Category 2 Entities: Monday, June 10, 2013
  • All other entities: Monday, September 9, 2013

Last Updated: July 25, 2013