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SEC Grants ICE Clear Europe and Eurex Clearing Exemptions to Operate CDS CCPs

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The Securities and Exchange Commission (SEC) has approved conditional exemptions that will allow ICE Clear Europe and Eurex Clearing to operate as central counterparties (CCPs) for clearing credit default swaps (CDS).

These conditional exemptions provide the SEC with regulatory oversight of the CCPs and should enhance the quality of the CDS market and the Commission’s ability to protect investors.

“Today’s actions represent an additional piece in the Commission’s ongoing efforts, in coordination with other regulators, to promote central clearing as part of a regulatory framework for CDSs,” says SEC chairman Mary Schapiro. “By facilitating the use of CCPs, these conditional exemptions should help in addressing concerns about counterparty risk, market transparency and market integrity associated with the credit default swap market, and thereby contribute to the goal of reducing systemic risk.”

On 24 December 2008, the SEC approved temporary exemptions allowing LCH.Clearnet to operate as a CCP for CDSs. On 6 March 2009 and 13 March 2009, respectively, the SEC approved similar temporary exemptions for ICE US Trust and the Chicago Mercantile Exchange. The SEC is soliciting public comment on all aspects of these exemptions to assist in its consideration of any further action that may be needed in this area.

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