CFTC Issues First Set of Mandatory Clearing Determinations and Time-Limited No-Action Relief


On November 28, the Commodity Futures Trading Commission (CFTC) issued final clearing determinations (Final Determinations) with respect to four classes of interest rate swaps (IRS) and two classes of credit default swaps (CDS). The CFTC was scheduled to adopt the Final Determinations at an open meeting to be held yesterday, but the meeting was canceled and the Final Determinations were issued by seriatim on November 28 instead.

The Final Determinations were widely anticipated by market participants and are significant because they mark the first set of swaps that will be subject to mandatory clearing pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act. CFTC Chairman Gary Gensler, in a statement of support for the Final Determinations, indicated that the Final Determinations “[complete] the clearing building block” that “is one of three major building blocks of Dodd-Frank [Act] swaps market reform.”

The CFTC’s proposal to clear the IRS and CDS that are the subjects of the Final Determinations (conforming IRS and CDS) was issued last summer. Based on the CFTC’s press release and a pre-publication copy of the Final Determinations, there do not appear to be any changes between the types of swaps that were proposed to be subject to mandatory clearing and those that will be.

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