CFTC Issues Final Rules To Implement Enhanced Risk Management Standards For Systemically Important Derivatives Clearing Organizations
The Commodity Futures Trading Commission (CFTC) approved final rules to implement enhanced risk management standards for systemically important derivatives clearing organizations (SIDCO).
The adoption of these rules is an important first step in making the CFTC’s rules for SIDCOs fully consistent with the Principles for Financial Market Infrastructures, thereby enabling them to continue to be Qualifying Central Counterparties for purposes of international bank capital standards. The final rules (1) increase financial resources requirements for SIDCOs that are involved in activities with a more complex risk profile or that are systemically important in multiple jurisdictions, (2) prohibit the inclusion by SIDCOs, in calculating their available default resources, of assessments, and (3) enhance system safeguards for SIDCOs for business continuity and disaster recovery. The final rule also implements special enforcement authority over SIDCOs granted to the CFTC under section 807(c) of the Dodd-Frank Wall Street Reform and Consumer Protection Act.