Asian clearinghouses seek CFTC exemption
In August the Commodity Futures Trading Commission issued an exemption to Australia’s ASX Clear from registering as a derivatives clearing organization. The exemption allows ASX Clear to offer its clearing services to U.S. members of ASX Clear for swaps denominated in U.S. dollars, euros, Japanese yen, British pounds, Australian dollars and New Zealand dollars. It was the first of such exemptions granted. The agency is also considering similar petitions from Japan Securities Clearing Corp. and the Korea Exchange.
If approved, JSCC and Korea Exchange would be able to offer clearing services for swaps to U.S. members of their clearinghouses, but not their customers. JSCC originally sought to register with the CFTC as a DCO, but after several years of discussions decided to change its approach and seek an exemption instead. JSCC is currently providing clearing services under a temporary no-action letter granted by the CFTC in December 2012.
The CFTC separately announced the signing in September of a memorandum of understanding with the Korean Financial Services Commission and the Korean Financial Supervisory Service regarding cooperation and the exchange of information in the supervision and oversight of clearinghouses that operate on a cross-border basis in the U.S. and South Korea. The MOU may help open the door for the Korea Exchange to clear interest rate swaps for U.S. banks that are members of its clearinghouse.
The CFTC said its determinations for Korea Exchange and JSSC will be based on whether the clearinghouses are subject to comparable, comprehensive supervision in their home countries. KRX is currently providing clearing services for Korean Won-denominated interest rate swaps under a temporary no-action letter granted by the CFTC in June 2014.
