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    PCTCP Factsheet

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    The Commodity Futures Trading Commission is proposing new rules to facilitate the prompt clearing of swaps and timely transfer of customer positions between clearing members. The rules would establish timeframes for submitting transactions for clearing, accepting transactions for clearing, and coordinating between entities. They would also require derivatives clearing organizations to promptly transfer customer positions and funds between clearing members upon request without closing out the positions.

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    PCTCP Factsheet

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    The Commodity Futures Trading Commission is proposing new rules to facilitate the prompt clearing of swaps and timely transfer of customer positions between clearing members. The rules would establish timeframes for submitting transactions for clearing, accepting transactions for clearing, and coordinating between entities. They would also require derivatives clearing organizations to promptly transfer customer positions and funds between clearing members upon request without closing out the positions.

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    The Commodity Futures Trading Commission is proposing new rules to facilitate the prompt clearing of swaps and timely transfer of customer positions between clearing members. The rules would establish timeframes for submitting transactions for clearing, accepting transactions for clearing, and coordinating between entities. They would also require derivatives clearing organizations to promptly transfer customer positions and funds between clearing members upon request without closing out the positions.

    Copyright:

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    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    208 views2 pages

    PCTCP Factsheet

    Uploaded by

    MarketsWiki
    The Commodity Futures Trading Commission is proposing new rules to facilitate the prompt clearing of swaps and timely transfer of customer positions between clearing members. The rules would establish timeframes for submitting transactions for clearing, accepting transactions for clearing, and coordinating between entities. They would also require derivatives clearing organizations to promptly transfer customer positions and funds between clearing members upon request without closing out the positions.

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    Commodity Futures Trading Commission

    Office of Public Affairs


    Three Lafayette Centre
    1155 21st Street, NW
    Washington, DC 20581
    www.cftc.gov

    Proposed Rule Regarding Requirements for


    Processing, Clearing, and Transfer of Customer Positions
    The Commodity Futures Trading Commission is proposing rules to supplement previously proposed rules for swap
    dealers, major swap participants, futures commission merchants, swap execution facilities, designated contract
    markets, and derivatives clearing organizations, with the objective of facilitating the prompt clearing of swaps and,
    upon customer request, the timely transfer of customer positions and related funds.

    Proposed rules to establish time frames for submission of transactions for clearing

    The Commission is proposing rules that would set forth the required time frame for a swap dealer (SD), major swap
    participant (MSP), futures commission merchant (FCM), swap execution facility (SEF), and designated contract
    market (DCM) to submit contracts, agreements, or transactions to a derivatives clearing organization (DCO) for
    clearing.

    SD and MSP submission of swaps for clearing (through a clearing member FCM, as appropriate) pursuant to
    proposed § 23.506:
    • Swaps subject to mandatory clearing – Under proposed § 23.506(b)(1), an SD or MSP would have to submit
    the swap for clearing as soon as technologically practicable following execution, but not later than the close
    of business on the day of execution.
    • Swaps not subject to mandatory clearing – Under proposed § 23.506(b)(2), if cleared, such swaps would
    have to be submitted for clearing not later than the next business day after execution of the swap or the
    agreement to clear, if later than execution.

    SEFs and DCMs would submit swaps for clearing immediately upon execution.

    Proposed rules to establish time frames for processing and clearing transactions

    The Commission is proposing a new § 39.12(b)(7) to clarify a DCO’s timing for processing and clearing contracts,
    agreements, and transactions, including swaps.
    • Transactions executed on a SEF or DCM – A DCO must accept for clearing, immediately upon execution,
    all transactions listed for clearing by the DCO.
    • Swaps not executed on a SEF or DCM and subject to mandatory clearing – A DCO must accept for
    clearing, upon submission to the DCO, all swaps that are listed for clearing by the DCO.
    • Swaps not executed on a SEF or DCM and not subject to mandatory clearing – A DCO must accept for
    clearing, no later than the close of business on the day of submission to the DCO, all swaps that are listed
    for clearing by the DCO.

    Coordination among registrants to facilitate prompt and efficient transaction processing

    Commodity Futures Trading Commission ♦ Office of Public Affairs ♦ 202-418-5080


    SDs and MSPs. Proposed § 23.506(a)(2) would require SDs and MSPs to coordinate with each DCO to which the
    SD or MSP, or its clearing member, submits transactions for clearing, to facilitate prompt and efficient swap
    transaction processing.

    SEFs. Proposed § 37.702(b)(2) would require a SEF to coordinate with each DCO to which it submits transactions
    for clearing, in the development of rules and procedures to facilitate prompt and efficient transaction processing
    (implements SEF Core Principle 7, Financial Integrity of Transactions).

    DCMs. Proposed § 38.601(b) would require a DCM to coordinate with each DCO to which it submits transactions
    for clearing, in the development of rules and procedures to facilitate prompt and efficient transaction processing
    (implements DCM Core Principle 11, Financial Integrity of Transactions).

    DCOs. Proposed § 39.12(b)(7)(i) would require each DCO to coordinate with each SEF and DCM that lists for
    trading a product that is cleared by the DCO, in developing rules and procedures to facilitate prompt and efficient
    processing of all contracts, agreements, and transactions submitted to the DCO for clearing (implements DCO
    Core Principle F, Participant and Product Eligibility).

    Supplemental rules to implement DCO Core Principle F

    To supplement previously proposed rules, the Commission is:


    • re-proposing § 39.12(b)(2) to clarify the role of the DCO in establishing the terms and conditions for swaps
    that it accepts for clearing;
    • proposing a new § 39.12(b)(4) that would prohibit a DCO from requiring that one of the original executing
    parties to a swap must be a clearing member in order for the transaction to be eligible for clearing; and
    • re-proposing § 39.12(b)(3) (renumbered as § 39.12(b)(5)) to clarify a DCO’s role and objectives in selecting
    contract units for clearing that are smaller than the contract units in which trades submitted for clearing
    were executed.

    Prompt transfer of customer positions and related funds upon customer request

    The Commission is proposing a new § 39.15(d) to implement DCO Core Principle F (Treatment of Funds),
    requiring a DCO to have rules providing that, upon the request of a customer and subject to the consent of the
    receiving clearing member, the DCO will promptly transfer all or a portion of such customer’s portfolio of
    positions and related funds from the carrying clearing member to another clearing member, without requiring the
    close-out and re-booking of the positions prior to the requested transfer. The requirement that the DCO not
    require close-out and re-booking of positions eliminates a source of unnecessary delay and market disruption, and
    conforms with current futures industry practices.

    Commodity Futures Trading Commission ♦ Office of Public Affairs ♦ 202-418-5080

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