The CFTC Division of Clearing and Risk ("DCR") extended previously granted no-action relief exempting Shanghai Clearing House ("SHCH") from the requirement to register as a derivatives clearing organization ("DCO"). The relief was originally granted by CFTC Letter 16-56 (extended by CFTC Letters 17-26 and 17-62). Pursuant to the terms of the relief, SHCH is allowed to clear certain swaps that are subject to mandatory clearing in China for the proprietary trades of U.S. clearing members.
The CFTC must execute a Memorandum of Understanding ("MOU") with the DCO's home country regulator before granting a permanent exemption from registration requirements. The DCR noted that it is currently discussing a potential MOU with SHCH's home country regulator, the People's Bank of China.
The relief was scheduled to expire on February 28, 2018. It is now extended until the earlier of (i) February 28, 2019, and (ii) the date on which the CFTC grants SHCH an exemption from DCO registration.
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