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Appendix 2 – Analysis of New Responsibilities and Authorities on 2013 Budgetary Requirements (continued)

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Analysis of Registered Derivatives Clearing Organizations

In FY 2013, the Commission will regulate the clearing of standardized swaps through CFTC-registered derivatives clearing organizations (DCOs).  To regulate DCOs the CFTC will be required to:

All DCOs that clear swaps must submit the contracts to the CFTC, who must then make a decision as to whether the swaps are subject to clearing requirement.  The CFTC has 90 days after the submission, including a 30-day comment period, to make such determinations.  Though we do not yet know the total number of contracts that will be submitted for clearing, and the Commission may be able to group many by class, the largest swaps clearinghouse currently clears nearly one million unique contracts.  There currently is no requirement for the CFTC to make similar determinations in the futures market.

The CFTC will also designate which DCOs are systemically important.  These entities will have to comply with heightened risk management and other prudential standards.  The Commission will be required to examine systemically important DCOs at least yearly.  We also have to ensure that all DCOs comply and bring their rules up to the new Dodd-Frank Act Core Principles.  In FY 2011, 17 DCOs were registered with the CFTC.  The Commission projects that at least 20 DCOs will register in FY 2013.

Registered Derivatives Clearing Organizations (DCOs)
  1. Cantor Clearinghouse L.P.
  2. Chicago Board of Trade
  3. Clearing Corporation
  4. CME Clearing House
  5. CME Clearing Europe
  6. ICE Clear Credit
  7. ICE Clear Europe Limited
  8. ICE Clear US Inc.
  9. International Derivatives Clearinghouse, LLC
  10. Kansas City Board of Trade Clearing Corporation
  11. LCH Clearnet Ltd.
  12. Minneapolis Grain Exchange Clearing House
  13. Natural Gas Exchange Inc.
  14. New York Portfolio Clearing, LLC
  15. North American Derivatives Exchange Inc.
  16. New York Mercantile Exchange Clearing House
  17. Options Clearing Corporation

Inventory and Status of New Rules Impacting Projected Registrants
Rules Under Development Status
Governance & Possible Limits Still under Commission consideration
Financial Resources Requirements for DCOs and SIDCOs Sep 22 meeting
Rule Certification Done
Alternatives to Credit Ratings Done
Investment of Customer Funds On hold
Process for Review of Swaps for Mandatory Clearing Done
Bankruptcy - Protection of cleared swaps (NPR) Comment period still open
DCO Core Principles - Legal & Compliance Sep 22 meeting
Information Management Requirements for DCOs Sep 22 meeting
End User Exemption (OGC)
Governance & Possible Limits - Core Principles Implement. Still under Commission consideration
DCO Core Prin. & Systemically Imp. DCO (Risk Mgt) Sep 22 meeting
Processing, Clearing & Transfer of Customer Positions Comment period still open
Segregation of Cleared Swaps Comment period still open
Inter-affiliate exemptions (OGC)
End User Exemption for small credit unions and farm credit banks (OGC)
Governance & Possible Limits - Core Principles Implementation Still under Commission consideration

Technology for DCOs

IT Category

IT Requirement1
New Mission Authorities Position Limit Monitoring Online Participant Portal
Electronic Forms (102, 40, etc.)
Futures and OTC Risk Management
Current Mission Authorities Large Trader Reporting, Trade Practice Compliance, Filings & Actions
RSR/SPARK Volatility Database, Variation Margin, Quarterly Financial Statements, Monthly Financial Statements, New Schedules and Reports
Consistent Management of Commission Work Products - e.g., No Action Letters

1 The listing of technology requirements is not limited to registrants but support other activities Commission-wide. (back to text)


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