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
IQ Interview with Mark Uyeda
Mandatory clearing of US Treasury securities is due to begin at the end of this year under rules finalized by the Securities and Exchange Commission (SEC) in 2023. SEC commissioner Mark Uyeda talks to IQ about the benefits of clearing...
Response to FCA on CFI Codes for Transparency
On March 19, ISDA responded to Chapter 3 of the UK Financial Conduct Authority’s (FCA) Quarterly Consultation CP26/8 on transparency requirements for financial instruments under Market Conduct Sourcebook (MAR) 11. Sections 3.11-3.13 of the consultation paper explain a discrepancy between...
Why We Need Safe and Efficient SFT Markets
Securities financing transactions (SFTs) play a vital role in fostering liquidity, mobilizing collateral and supporting the smooth functioning of derivatives markets. But during periods of stress, secured funding markets often come under pressure just when they’re needed most, with reduced...
Response to BoE on Clearing Exemption for PTRR
On March 11, ISDA submitted a response to the Bank of England’s consultation on a proposed approach to exempting post-trade risk reduction (PTRR) transactions from the derivatives clearing obligation under Article 4 of the European Market Infrastructure Regulation (EMIR). ISDA...