Public Statements & Remarks

Supporting Statement of Commissioner Brian D. Quintenz Regarding Exemption from Derivatives Clearing Organization Registration Final Rule

November 18, 2020

I support today’s final rule to codify the CFTC’s existing practice of exempting non-U.S. derivatives clearing organizations (DCOs) from registration, pursuant to a provision of the Commodity Exchange Act that allows for U.S. swap market participants to access comparably regulated foreign DCOs.[1]  That provision authorizes the Commission to defer to its counterparts abroad, which I believe properly conserves the Commission’s resources and enables firms to avoid duplicative regulation, while providing U.S. market participants with greater choice.  I am proud that today’s final rule provides yet another example of the CFTC deferring to foreign regulators that provide comparable regulation and supervision.  During my tenure as a Commissioner, the CFTC has properly provided such deference in many areas, including swap dealer (SD) registration,[2] uncleared swap margin requirements,[3] swap execution facilities (SEFs),[4] registered DCOs, [5] and foreign futures.[6]  Like these other actions, today’s final rule holds exempt DCO to a high regulatory standard.  Under the final rule, a DCO is only eligible for an exemption if its home country regulator ensures the clearinghouse complies with rules consistent with the internationally accepted “Principles for Financial Market Infrastructures” (PFMIs) issued by CPMI-IOSCO.[7]  Moreover, the exempt DCO must regularly provide the CFTC with margin information concerning U.S. clearing members, among other key information.[8]

I note that under the final rule, an exempt DCO will only be authorized to clear the proprietary positions of its U.S. clearing members.  I had supported and still support the Commission’s 2019 proposal that would have expanded the exempt DCO framework to allow for U.S. customers, like asset managers and insurance companies, to clear at exempt DCOs directly to better manage and hedge their risk.[9]  I continue to believe that all participants meeting the Commodity Exchange Act’s definition of “eligible contract participant”[10] have the resources, sophistication, and incentives to adequately assess how customer protections provided by an exempt DCO may differ from protections established by CFTC regulations for registered DCOs.  The CFTC should provide these market participants with the choice befitting their status, not only as sophisticated market participants, but as complex international organizations who need access to foreign markets, products, and a choice of liquidity pools.  I hope the Commission will continue to consider the best way to expand the exempt DCO framework to allow for U.S. customer clearing.


[1] Sec. 5b(h) of the Commodity Exchange Act.

[2] Cross-Border Application of the Registration Thresholds and Certain Requirements Applicable to SDs and Major Swap Participants (MSPs), 85 Fed. Reg. 56,924 (Sept. 14, 2020).

[3] Comparability Determination for Australia: Margin Requirements for Uncleared Swaps for SDs and MSPs, 84 Fed. Reg. 12,908 (Apr. 3, 2019); Amendment to Comparability Determination for Japan: Margin Requirements for Uncleared Swaps for SDs and MSPs, 84 Fed. Reg. 12,074 (Apr. 1, 2019).

[4] Amendment to Order of Exemption from SEF registration for Recognized Market Operators authorized in Singapore, Nov. 2, 2020, available at:

Amendment to Order of Exemption from SEF registration for E.U. multilateral trading facilities and organized trading facilities, July 23, 2020, available at:

Order of Exemption from SEF registration for Japanese derivatives trading facilities, July 11, 2019, available at:

[5] Registration with Alternative Compliance for Non-U.S. DCOs, 85 Fed. Reg. 67,160 (Oct. 21, 2020).

[6] Regulation 30.10 orders issued to the Bombay Stock Exchange, National Stock Exchange Int’l Financial Service Centre Ltd. [India], Montreal Exchange, NZX Ltd. [New Zealand], and UBS AG [Switzerland], Nov. 2, 2020, available at:

[7] Reg. 39.6(a)(1)(i).

[8] Reg. 39.6(c).

[9] Exemption from DCO Registration, 84 Fed. Reg. 35,456 (July 23, 2019); Opening Statement of Commissioner Brian Quintenz before the Open Commission Meeting on July 11, 2019, available at:

[10] Sec. 1a(18) of the Commodity Exchange Act.