Appendix 2 – Analysis of New Responsibilities and Authorities on 2013 Budgetary Requirements (continued)
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:
- register entities that seek to act as DCOs for swaps;
- examine all new DCOs for compliance with statutory and regulatory requirements; including new DCO core principles;
- examine annually all systemically important DCOs for compliance with statutory and regulatory requirements of the Act;
- examine all swap dealers and major swap participants for compliance with the Act;
- examine entities that seek to act as swap dealers and major swap participants and draft regulations with respect to same; as well as,
- draft regulations that give effect to DCO core principles and require futures commission merchants and introducing brokers to implement conflict of interest systems and procedures.
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.
|
| 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 |
IT Category |
IT Requirement1 |
|---|---|
| New Mission Authorities | Position Limit Monitoring |
| CFTC.gov 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, FILAC, Comments Online, EMAT, PMP, FOIA | |
| 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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