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The proposed rulemaking aims to update definitions, procedures, and core principles for Derivative Clearing Organizations (DCOs). The rules seek to clarify terms, streamline the registration process, standardize procedures for corporate changes, require approval for new margining services, implement new chief compliance officer duties, and codify core principles around compliance, enforcement, antitrust, and legal risk. The proposed updates aim to make rules consistent with recent legislation and provide more regulatory certainty. The proposed rules would apply to all registered DCOs, and public comments must be submitted within 60 days of Federal Register publication.

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231 views

Dcodpcp Qa

The proposed rulemaking aims to update definitions, procedures, and core principles for Derivative Clearing Organizations (DCOs). The rules seek to clarify terms, streamline the registration process, standardize procedures for corporate changes, require approval for new margining services, implement new chief compliance officer duties, and codify core principles around compliance, enforcement, antitrust, and legal risk. The proposed updates aim to make rules consistent with recent legislation and provide more regulatory certainty. The proposed rules would apply to all registered DCOs, and public comments must be submitted within 60 days of Federal Register publication.

Uploaded by

MarketsWiki
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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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

Q & A – Derivative Clearing Organization


Definitions, Procedures and Core Principles
What is the goal of the proposed rulemaking?

The notice proposes definitional and procedural changes to Parts 1 and 39, requirements for submitting portfolio margining
rules for prior approval, requirements for a Derivatives Clearing Organization’s (“DCO”) chief compliance officer (“CCO”),
and rules to implement DCO Core Principles A (compliance), H (rule enforcement), N (antitrust considerations), and R (legal
risk).

Why is the Commission proposing these rules?

The Commission is proposing to amend certain definitions in § 1.3 and § 39.1 to make the definitions consistent with the
terminology currently used in the Commodity Exchange Act (“CEA”), as amended by the Dodd-Frank Act, and to provide
clarity and legal certainty.

The proposed rules would amend § 39.3 to streamline the DCO application process by eliminating the 90-day expedited
application review period. Over the past nearly 10 years, the Commission has determined that a 90-day period is not
practicable. All applications would be reviewed on a 180-day schedule.

The proposed amendments would clarify the procedures to be followed by a DCO when requesting a transfer of its DCO
registration due to a corporate change. Currently, there are no rules on this topic, and the proposed rules would provide legal
certainty.

In accordance with Section 713 of the Dodd-Frank Act, proposed § 39.4 would require a DCO to obtain Commission
approval to provide clearing and settlement services for a futures portfolio margining account that carries securities.

Section 725(b) of the Dodd-Frank Act requires each DCO to designate a CCO and further specifies the duties of the CCO.
Proposed § 30.10 would implement this provision.

Finally, the proposed rulemaking would set forth the rules to implement DCO Core Principles A (compliance), H (rule
enforcement), N (antitrust considerations) and R (legal risk). The rules would promote effective compliance functions with
the CEA and Commission regulations and help create legal certainty regarding the clearing and settlement functions of a
DCO.

What registrants are covered by the proposed rules?

The proposed rules cover all DCOs.

By when must the comments be submitted?

Comments on the rules must be submitted within 60 days of the publication of the proposal in the Federal Register.

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

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