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A-Team Insight Blogs

CFTC Grants Eurex Clearing Approval to Clear US OTC Derivatives

The Commodity Futures Trading Commission (CFTC) has issued an order with respect to the multilateral clearing activities that Eurex Clearing intends to undertake in the United States for OTC derivative instruments.

Eurex is a central counterparty licensed by the Bundesanstalt für Finanzdienstleistungaufsicht (BaFin) of the Federal Republic of Germany. In the order, the CFTC determined that the supervision that BaFin, in conjunction with Deutsche Bundesbank, provides with respect to the multilateral clearing activities of Eurex satisfies appropriate standards within the meaning of Section 409(b)(3) of the Federal Deposit Insurance Corporation Improvement Act (FDICIA). Accordingly, the order permits Eurex to operate a multilateral clearing organisation for the clearing of OTC derivative instruments in the US. BaFin and the CFTC have entered into agreements providing for the sharing of information regarding the clearing activities of Eurex.

This order is the fourth action that the CFTC has taken on the basis of Section 409(b)(3) of FDICIA, which was added by the Commodity Futures Modernisation Act of 2000 (CFMA). Section 409 provides that an MCO for OTC derivative instruments, such as Eurex, may operate in the United States if, among other alternatives, the MCO is supervised by a foreign financial regulator that the CFTC, or one of several other United States financial regulators, has determined satisfies appropriate standards.

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