Clearing Procedures

Overview

A clearing member must accept or reject each trade submitted for clearing as quickly as technologically practicable as if fully automated systems were used. This timing standard requires action in seconds or, at most, minutes. In order to accomplish this, clearing members are required to: (1) establish credit and market risk-based limits based on position size, order size, margin requirements, or similar factors that will allow it to determine whether to accept trades for clearing; (2) use automated means to screen orders for compliance with these limits; (3) monitor for adherence to the risk-based limits intra-day and overnight; (4) conduct stress tests and evaluate its ability to meet initial margin requirements at least once per week; (5) evaluate its ability to liquidate positions at least once per month; and (6) test all lines of credit at least once per year.

Steven.Lofchie@cwt.com's picture
Contributor Organization 
Contributor Title 
Partner
nihal.patel@cwt.com's picture
Contributor Organization 
Contributor Title 
Special Counsel

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