The U.S. Commodity Futures Trading Commission (CFTC) has set out a timetable for mandatory clearing of certain derivatives.
The CFTC Tuesday approved final regulations that establish a schedule to phase in compliance with new clearing requirements under the U.S. regulatory reform known as the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). The final rule will phase in the clearing requirement based on the type of market participant entering into swaps.
Additionally, it proposed new rules to require certain credit default swaps (CDS) and interest rate swaps as the first products that must be cleared by registered derivatives clearing organizations.
Under the proposed rules, market participants would be required to submit a swap that is identified in the rule for clearing by a registered clearinghouse as soon as technologically practicable and no later than the end of the day of execution. The CFTC also is proposing regulations to prevent evasion of the clearing requirement. These proposals are out for a 30-day comment period.