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.