On October 11, ISDA responded to the Commodity Futures Trading Commission’s (CFTC) notice of proposed rulemaking (NPR). With the central role governance plays in a derivatives clearing obligation’s (DCO) risk management, we believe this NPR is very timely and will improve governance and risk management of DCOs. We, however, believe that this NPR is only the beginning and would welcome further improvements in DCO governance.
We are generally very supportive of this NPR. Risk Management Committees (RMCs), Risk Working Groups and wider consultation will promote transparency, accountability and predictability, and facilitate effective oversight by the Commission.
RMCs are good practice in many central counterparties (CCPs) and are already required by regulation in many other jurisdictions. We, therefore, welcome codification of such governance bodies as proposed by this NPR.
ISDA welcomes the consultation on additional topics, namely Market Participant Consultation Prior to a Rule Change and RMC Member Information Sharing with Firm to Obtain Expert Opinions. We believe both proposals would significantly improve DCO governance.
We note that the Securities Exchange Commission is also consulting on CCP governance and welcome that the two Commissions are liaising with each other.
Documents (1) for ISDA Responds to CFTC on CCP Governance
Latest
Expanding Legal Agreement Coverage in the CDM
This paper examines the recent extension of the Common Domain Model (CDM)1 to represent two of the most significant, and previously undeveloped, areas of its legal agreement model: umbrella agreements and contract amendments. Umbrella agreements are widely used to document...
ISDA Omnibus Canadian Representation Letter
On September 2, ISDA published the Omnibus Canadian Representation Letter, which combines previously published representation letters drafted to assist firms in compliance with Canadian trade reporting, business conduct, regulatory margin and clearing classification rules. The Omnibus Canadian Letter is designed...
Joint Response on Cross-margining
On August 31, ISDA and FIA submitted a letter to the US Commodity Futures and Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) on the agencies’ joint request for comment on the implementation of portfolio margining and cross-margining...
Accounting for Carbon Credits: Latest Developments
This paper updates and extends the analysis set out in ISDA’s October 2023 paper on accounting for carbon credits. While preserving the original focus on the accounting treatment of voluntary carbon credits (VCCs) and compliance carbon credits (CCCs), it expands...