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Screenshot of a breaking news alert e-mail from Q2 2017
The U.S. Commodity Futures Trading Commission (CFTC) has approved an amendment to and consolidation of LCH.Clearnet Ltd’s (LCH) orders of registration as a derivatives clearing organization (DCO). The amendment permits LCH to provide clearing services for “swaps,” as defined in the Commodity Exchange Act (CEA) and Commission regulations, as well as all futures and options on futures, regardless of the underlying asset class.
LCH’s original order of registration, issued by the Commission on October 29, 2001, permitted LCH to clear over-the-counter derivatives contracts, agreements or transactions that were at the time excluded or exempt from the CEA. Due to the repeal of certain provisions of the CEA by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) referenced in the original order, LCH had been clearing swaps pursuant to no-action relief issued by the Commission’s Division of Clearing and Risk (DCR).
The no-action relief permitted LCH and its clearing members to clear swaps executed on or subject to the rules of a designated contract market (DCM) or swap execution facility until the earlier of December 31, 2014, or the date upon which the Commission approved or denied LCH’s application for an amended DCO registration order to permit it to clear such swaps.
LCH received a second order of registration, issued by the Commission on May 11, 2004, which permitted LCH to clear financial futures and options on futures. LCH has been clearing energy contracts executed on Nodal Exchange LLC (Nodal), which, prior to the enactment of the Dodd-Frank Act, operated as an exempt commercial market.
In September 2013, the Commission issued an order approving Nodal as a DCM, and DCR and the Commission’s Division of Market Oversight issued a no-action letter permitting LCH and its clearing members to clear futures and options on futures listed for trading on Nodal until the earlier of December 31, 2014, or the date upon which the Commission approved or denied LCH’s application for an amended DCO registration order to permit it to clear all futures and options on futures.
For the official announcement from the CFTC, click here.