CFTC-adopted amendments to rules requiring registration for non-U.S. derivatives clearing organizations ("DCOs") were published in the Federal Register.
As previously covered, the adopted amendments to CFTC Rules Part 39 and Part 140 permit non-U.S. DCOs that clear swaps (but not futures) for U.S. persons to register with the CFTC, but be primarily subject to the rules of their home country regulators.
Among other things, for a non-U.S. DCO to be eligible for the alternative compliance mechanism, the following requirements must be met:
- The CFTC must determine that the non-U.S. DCO's compliance with its home country regulations would satisfy the CFTC's "DCO Core Principles," as set out in Part 39 of the CFTC Rules;
- The non-U.S. DCO must be in "good regulatory standing" with its home country regulator (which the CFTC noted does not require that the non-U.S. DCO must at all times maintain a clean regulatory slate with its home country regulator); and
- There must be a memorandum of understanding (or similar arrangement "satisfactory to the Commission") in place between the CFTC and the non-U.S. DCO's home country regulator.
The amendments go into effect on November 20, 2020.
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